Hey everyone. Here's my question... a friend/qualified investor wants to partner with me. The friend would provide 100% financing for purchase and renovation but otherwise be silent. It would be a buy and hold, not a flip. I would find the property as well as manage the renovation, and property manage it once rented. What experience do people have with this in regard to recommended/reasonable percentage ownership and profit split?
@Brian Berg - whatever you negotiate. You could ask for 50/50 of profits over his investment, or with buy and hold, 50/50 profits after he’s paid like 5-7% on his money loaned monthly. I have a property I bought for 200k and 100% financed. I pay the 7% on the money just like a loan and keep the remaining profit. I’m liable to repay the loan in full and I’ll also get all the forced appreciation I’m putting in with sweat equity. Some people just want a return on investment above their 1% CDs at the bank.
As I posted, I'm just looking for ideas on how others have handled this under similar circumstances. My friend and I would make a 50-50 LLC, but as I said, I am just curious what other people have done when they are partnering with someone who provides all financing and the financer does not just want to be like a bank but also be a partner in the deal.
Think long and hard. These titty bitty partnerships just don't work out.
I would not do the work and only take part of the cheese. Never in a million years. I have had a dozen offers to turn property manager and handyman for various moneymen over the years. No way. Not in an area where I can find a duplex for $45,000 and turn it into a place that rents for $1700/month. They can come begging to me with their money waving in their fist all day long. I do the work, I get the cheese, and if I grow at half the speed in the beginning, so be it.
This is why everyone has such trouble finding good, reliable contractors who will make you rich these days. People who can do the work are well aware of what the work is worth.
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