How to structure deals with OPM

Question

How do most people structure a deal with other people's money? I have an investor interested in some duplexes with me, but I'm not sure how to structure the deals so we both find value.

I'm not looking for all of the details, but maybe a basic outline, template or starting point for the discussion.

Thanks for any help you have.

Dan Graham

Anthony Dadlani · Answer

@Daniel Graham Many ways to structure. You can setup a joint LLC. We actually JV with many partners so instead of setting up a separate LLC with each, we just enter into a profit sharing agreement on each property.

Best of luck in all your endeavors.

Tom S. · Answer

@Daniel Graham  I've been able to partner with others on a few deals in the past.  Typically they would provide the downpayment and I would put the loan in my name, and we would split everything 50/50 after.

Also have down a few deals with seller financing for 20% of the purchase amount and bank financing for 75%, effectively leaving me in for 5% down.  Those deals have to be done with commercial loans as conventional wouldn't allow it.

Hope that helps!

Steve Morris · Answer

"How do most people structure a deal with other people's money?"

Is he debt or equity?  If debt, then should be pretty easy to draft.  Make sure you're on the same page for terms like buyout.

If equity, then need to figure out how to distribute earnings fairly.  You'll also need to charge FMV for your services running the property as an expense.

Jeffrey Edwards · Answer

You could enter into a partnership agreement in which you would have a document that outlines every aspect of the partnership like, funding, operations, responsibilities of each partner, disposition and so forth

How to structure deals with OPM

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