How To Partners on a Buy and Hold

Question

I have a property that I believe has potential in a good area. Already has a good tenant with lease through November. I have approached a possible partner to fund the house while manage the house. I’ve heard  that can be a good strategy for someone like myself who does have the funds to acquire the property. Any suggestions on how to structure the partnership if he agrees? I just want to make sure I’m not overlooking something.

Joel Miller · Answer

There are lots of partnerships out there that started with one person providing the money and another person providing the experience. Unfortunately, these often end with the person who had the experience having the money, and the person who had the money having an "experience." If you are already a skilled property manager, I can see where your arrangement could work with an investor, but otherwise they would just be carrying you in the deal. In any case, have an attorney help you with your business arrangement.

Richard F. · Answer

Define "manage" and what is your level and depth of knowledge on the subject? For that matter, how do you define "good Tenant"? These will have a direct relationship to your value as a partner. Otherwise, you are just a "bird dog" that found an opportunity, which is worth far less.

Michael Smythe · Answer

Usually, situations like this either involve a family member or friend trying to help out.

Or

Someone with more money than time that thinks this will be a "passive" investment, like a mutual fund.

Your challenge is making as much money for yourself as possible, balanced against be fair enough to the partner to keep them investing with you.

Most common in a 50/50 split on "profits", but what happens when funds are needed?

Chris Seveney · Answer

My question would be, what would be in it for this other partner? They could go buy a property and hire a property manager to manage it. Are you getting this at a significant discount? I'm just trying to understand the logistics so we can try and explain how to sell this to somebody that would make them want to partner with you.

How To Partners on a Buy and Hold

Most Popular Reply