I have recently been approached by a friend of mine who is interested in getting into real estate. I have a bit of experience as I have done 3 deals in the past. However they have all been relatively straight forward, using another person's money to invest is a totally new concept to me. My friend has about 10k in capital and is very willing to manage and improve on a property but has no idea how to obtain a mortgage or put together even the simplest of deals. He would like to go in together and buy a property. I am starting to love the deal making process and intend to read up about partnerships and using other peoples money but am reaching out for some preliminary guidance from the community. I have done some searching through the forums and it seems there are many ways a partnership can break down, but here are my specifics:
My friend can contribute 10k
I can contribute 10k
Property X costs $80,000, which requires a $16,000 down payment, with fees our total to buy the property costs $20,000
Property X generates $1000 NOI and we split it 50/50.
My confusion stems from how to bring the money together to pull this off.
1. Do I need a partnership? an LLC? Some legal document spelling out our terms?
2. Will a bank want both of our names on the mortgage and title, or just one? Is my friend a GP or is it like a married couple purchasing a home?
3. Do we split the cashflow, equity, risk 50/50?
4. 50/50 even fair if he manages it?
5. Who has final say on major decisions? or do both partners need to be in agreement?
Like I said, i'll be doing extensive research, but any info provided simplifies the process and helps me move faster!
I appreciate any book recommendations for investing with partners.
Before you do all that ..you guys need to sit down for dinner and spend a couple hours really hashing over what you expect to contribute what you expect to do as normal operating procedures how the money is saved for reserves how it’s spent on capital .what kind of entity your buying it in , what will be the exit strategy or if one person dies or becomes gravely I’ll . So many things to go over . You need to know all this BEFOREHAND. You don’t want to go into a joint venture butting heads because you guys didn’t hash out every facet of the plan first . So many people partner up but have conflicting ideas on what or how this business will be conducted
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