Rental investment

6 Replies

I am looking out for options to join of one of my friend as a silent/sleeping partner for rental property.if he provides the initial investment for mortgage down payment and i take care of complete work what should the sharing ratios.

Hi @Sid Kat  

Welcome to BP!!

I have heard the term "sleeping partner" after such a long time. I was born and raised in India and moved here after high school. "Sleeping partner" was a very common term we used in our high school business classes, but I am hearing it after a very long time. Thought it was interesting.

Anyway, as to your question, so your friend will pay the down payment and will he be the only one responsible for the loan in case something goes wrong or will both of you guarantee the loan repayment? If you both do personal guarantee and he puts the initial down-payment and you do the repairs. Assuming the down payment and the value of your repairs is in the same ball park, I think a 50/50 split should be fair to both of you.

What are your thoughts about profit split?

Thanks Sharad for your reply. I am also from India but newbie to real estate business.

I only own one rental unit on my own so kind of a starter only in real estate . I am new to rental patnership but I was also planning the 50/50 split and share mortgage guarantee. I haven't proposed any proposal yet but looking what will be fare option's.

My frnd is not from my place and I have to put time and effort in market analysis numbers, screening tenants and renting out and maintainence. So do you think I should repay him my share of down payment later and do 50/50 in the money left over from maintainence OR I should do 50/50 in the money left over from maintainence and make it clear to him that his intial down payment (25-30 percentage) will not be shared later.

I haven't understood when you mentioned value of repairs ? Do you mean I take care of all the unit repair expenses almost to 50 percent of downpayment and then share profits 50/50 .

Many Thanks in advance

Hi @Sid Kat  

I was talking about a 50/50 split if he was going to put the money up and you were going to do all the work. Let's say if he puts $10,000 down and you do $10,000 worth of work and you guys share the mortgage guarantee, then you can share profit 50/50 after deducting for your management fee (if you are going to manage)

Good luck!!

I'm not from India but I have been to Indiana.... so I have that going for me. I like what Dave Ramsey says, "the only ship that won't sail is a partner-ship". Maybe you could borrow the money from him with interest but not tie it to the real estate deal. When you first start out, it's no fun being alone but later, it's no fun sharing the proceeds. ... Just one guys opinion. Good luck.

Welcome @Sid Kat  !

I did this exact scenario that you are describing on my first two deals because I thought I had to have a partner to help.

In the end, I do ALL the work and the partner stopped answering my email about a year ago.  I've had to invest some of my own funds because the "financial partner" has lost interest - so, in the end, I do all the work and have put some cash into the deal only to just split the profits 50/50...

To do over, I would suggest looking for just a private money partner and pay them a flat APR or monthly rate vs giving them any ownership.

I found out [very quickly] that there is private lenders out there and finding the funds isn't as hard as I thought it would be.

Good luck.

Thanks Glenn and Shawn. I agree with you and I kept partner ship as last option.

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