Investor · Leesville, SC · Member since 2017 · 3 posts · 1 vote
Hi BP ,
This my first post on the forums. I'm looking at triplex and want to use a partner on the down payment. Rehab rent refi, in six months and return his money to him with a good ROI for him. If I can make the numbers work, how do we structure the partnership for a scenario like this? Thanks BP Community.
Rental Property Investor · Greeley, CO · Member since 2017 · 226 posts · 99 votes
9y
@Tim Freeze do you have an investor lined up already? If so, talk to them about what they want. They may have a way that they want to structure the deal.
Two options come to mind immediately for me. First would be to set up an LLC with the partner and in your operating address how they are to be repaid and bought out of the LLC. This would be as an equity investor.
The second option be to have the partner lend you the money and secure their interest in the property with a second mortgage. In this scenario they would be a debt investor. They would have less say in the property but when you go to refinance or sell in most instances they would automatically be set up to get paid off.
There are a lot of other creative ways you could probably do this, but these are the first two ideas that come to mind.
Rental Property Investor · Greeley, CO · Member since 2017 · 226 posts · 99 votes
9y
@Tim Freeze do you have an investor lined up already? If so, talk to them about what they want. They may have a way that they want to structure the deal.
Two options come to mind immediately for me. First would be to set up an LLC with the partner and in your operating address how they are to be repaid and bought out of the LLC. This would be as an equity investor.
The second option be to have the partner lend you the money and secure their interest in the property with a second mortgage. In this scenario they would be a debt investor. They would have less say in the property but when you go to refinance or sell in most instances they would automatically be set up to get paid off.
There are a lot of other creative ways you could probably do this, but these are the first two ideas that come to mind.
Real Estate Consultant · Lancaster, CA · Member since 2014 · 423 posts · 223 votes
9y
I would have them invest as a debt investor in the 2nd lien position, They basically loan you the money for certain period of time (2-5 years let's say) and you negotiate terms (interest rate, interest-only or amortized, points up front, pre-payment penalties, right to collect rents in case of default, etc.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
9y
@Tim Freeze Keep me mind this won't work for most conventional financing, unfortunately. They're going to ask if any of the downpayment is borrowed, and will question any large deposits into your bank account. Some 1st lenders will not allow 2nd's either. Also conventional lenders don't loan to LLC's.