Partnerships in Buy and Hold Rentals?

8 Replies

Hi everyone,

I'm thinking of purchasing my first investment property, most likely a rental. I realize that this might be a silly question: if I purchase the property with a partner, what kind of profit should we expect to see?

Even if the positive cashflow does wind up being ~$100-200 a door (which I understand would be considered a win from the podcast, forums, etc.), we would technically only be taking home around $50-100/month. Or is the more attractive incentive a split in the profits when we decide to sell the property?

There is no get rich quick scheme in real estate investing. You could try and find a better deal where you earn more per door. Sure, long term the property may see appreciation and that may make you money when you sell. But buy and hold investing is about the long, hard slog.

Hey @James Nam if a property produces $200/door cash flow per month, then yes, you would each take home $100/month if you use a 50/50 partnership.  My business partner and I have things on a 50/50 share at the moment because we have each put up the same amount of capital and if/when we sell we will each take 50% of the profits.

Before you consider partnering just to partner consider what your potential partner will bring to the table: Credit, cash, knowledge, experience, networks etc and compare that with what you are bringing to the table.

Some of the answers to your questions depend on how you intent to structure your partnership and what your goals are for this partnership.

Best of Luck

Thanks for the response Wendy! No doubt - this is an investment that I hope will appreciate, and I am preparing myself for the long haul. First time landlording too, oh lawd...

@Jesse Waters thanks for the input! There's definitely a lot we need to figure out at the moment; I just wanted to see what the greater BP community's experience is with partnerships in this particular area of REI.

Thanks!

James Nam,

I am in a similar position, I am developing a strategy to purchase Multi-Family Commercial properties in NJ.  I agree with Jesse Water,  but would  add: much like a Real Estate deal,  its all about how you structure the partnership. in case it doesn't work out, your agreement should included language outlining how to dissolve the partnership when drawing up your partnership papers.

PS, As a newbie myself, I have been trying to go it alone, I am considering an equal partner or Joint Venture.

William G., Square Center LLC | [email protected] | 973 497 2452

@William G.

I've been trying to analyze... but lo and behold RE costs in NJ are ridiculous, and in my beginner-ness I don't recognize what the good deals are. Good luck to us!

@James Nam undefined

its all about the numbers and correct data  of price, expenses and cash flow- I'm reading "what every real estate investor needs to know about cash flow and 36 other key financial measure   by Frank Gallinelli,  its a great resources for understanding the numbers  needed to determin a Good Deal.    

William G., Square Center LLC | [email protected] | 973 497 2452

@William G.

 Thanks for that resource -- I will definitely be checking it out.