Partnership *Equity* Split?

1 Reply

I plan on purchasing a duplex with a partner. The duplex costs $160K which we plan on putting 20% down ( 32K). We plan spiting the title and the loan 50/50, although my partner with only have 10K at the time of purchase. Therefore I will be in for 22K and they will be in for 10K.  This mean they will owe me 6k to bring our equity to 16K (me) and 16K(them).

How can we structure this partnership so that I get payed back with in 1-3 years. Options include taking a bigger percent of cash flow, or maybe starting him at 30% equity and allowing him to buy the addition 20% with his 6K. 

My Benefit: I live out of state, therefore my partner will act as a PM initially (since the duplex is occupied and in good condition). Partner will also establish relationships with agent, contractor.

Their Benefit: I am giving him an zero interest loan of 6K. Although he will have to match inflation on a yearly basics. 

Let me know what you guys think.

<THANKS>

Is your partner taking a property management fee for providing that service?

I'd be inclined to go the 70/30 equity split route, with him having the option to buy the 20% from you for $6k at the same valuation later.

How are you handling signing on your loan?

What's your exit strategy on the property?

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