New Investor Partnership

3 Replies

Hey everyone!

I am a new RE investor in Oregon. I am looking to purchase and rehab my first deal for about $100k. I only have $20k cash and $20k credit to Home Depot. I do no not have a private lender. I considered hard money as long as I had a partnership.

Well, it is looking like I found a partner who happens to be a general contractor. He said screw the hard money because he has $200k to invest. He is also looking to rehab and is just starting RE investing like me.

Our conversation sounded like we would still share the profit 50/50. My devotion would be marketing, finding leads, making offers, and makeover rehab work. His devotion would be rehab estimates and more than cosmetic rehab work. I would also be learning how to do all that stuff from this guy.

My questions are: do we pool our resources into an escrow account? What are the correct steps to form a partnership on a single transaction. If things work out, we would form a company, but I think for our first deals, we will be representing ourselves.

Any advice or direction is appreciated!

Thanks!

@Joe Mendoza Put everything in writing, with responsibilities, percentages, resolution of issues, everything. Not just for legal reasons but because it also helps make sure you are both on the same page. The more detailed the agreement, the less likely you are to have problems.

An even split would not be that unusual even with a 80-20 split on cash, if the partner with less money had more time or experience. And to be honest finding the deal, a REAL DEAL, is definitely the hardest part. Plus you can bring that to a 60-40, including credit, but make sure you clarify the split on profit as well as responsibilities.

Awesome thanks @Walt Payne

So does "in writing" typically mean via a lawyer?

Originally posted by @Joe Mendoza :
Awesome thanks @Walt Payne

So does "in writing" typically mean via a lawyer?

It doesn't have to, but not a bad idea since a good lawyer should know to at least ask about the important stuff. A friend or associate who has done similar deals should also be able to help. I would discuss details and write a draft before seeing the lawyer if you go that route.