Investing with Partner / Tenant???

7 posts by 4 users

Medium 1402242077 avatar bkinsman Blake Kinsman
Real Estate Investor from Nashville, TN
15 Posts
8 Votes
1 Award

Blake Kinsman

Real Estate Investor from Nashville, Tennessee

Jan 15 '13, 11:35 AM


I have a potential partner that is also looking to buy his first home. How could I structure a deal in which he is the tenant and partner?

Some of the advantages I see:
- We wouldn't need to put 20% down for a conventional investment loan.
- I may be able to capitalize on any first-time home buyer incentives he gets.
- I would trust the tenant.
- My partner would be conveniently located for updating the property.
- There would not be a rush to flip the property.

Questions:
- Would I be able to collect any monthly income, or would I have to wait for sale of the property?
- What type of contract should I put together to protect myself?

Thanks in advance!

- Blake



Medium 1399660630 avatar rrwolfpack Marc Bodinger
New York City, NY
253 Posts
5 Votes
0 Awards

Marc Bodinger

from New York City, New York

Jan 15 '13, 11:53 AM


In my opinion that more partners you take on the more complicated the deal becomes. This sounds like a rent to own scenario. Why can't you own the property at first and then when your partner can afford it he can just buy it from you. Would that type of framework work?



Blake Kinsman

Real Estate Investor from Nashville, Tennessee

Jan 15 '13, 11:59 AM


Well we are looking to start acquiring rental properties together. He can afford it, but we were just brainstorming trying to figure out if there is a way to make his house be our first property.



Medium 1399652652 avatar royceofre Tracy Royce
Foreclosure Specialist from Scottsdale, AZ
150 Posts
30 Votes
2 Awards

Tracy Royce

Foreclosure Specialist from Scottsdale, Arizona

Jan 15 '13, 12:00 PM
1 vote


Hi Blake tread lightly in these situations. It can work and I've done it, but the property is titled into a trust with outlining trust docs and partnership agreement. Be very explicit on your terms and agreements.

There was an article posted recently on the BP blog about partnership agreements, written by an incredibly smart author (ok ok it's my post) In any case hope this helps:

http://www.biggerpockets.com/renewsblog/2013/01/10/real-estate-partnership-agreements/



Telephone: 602-741-1602
Website: http://www.royceofrealestate.com


Blake Kinsman

Real Estate Investor from Nashville, Tennessee

Jan 15 '13, 12:14 PM


Thanks, @Tracy Royce. I actually read your post last night...great advice! Like I said before, we are currently just brainstorming on how to kick this thing off. We figured he could live in it while we fixed it up (it's a street over from my house), and then when the conditions are right, we would sell it and make millions! OK, more like $20k.



Medium 1399502465 avatar stevenhamilton Steven Hamilton II
Tax Accountant from Lake Villa, IL
3783 Posts
1086 Votes
13 Awards

Steven Hamilton II Verified

Tax Accountant from Lake Villa, Illinois

Jan 15 '13, 12:39 PM
1 vote


@Blake Kinsman,

Follow what @Tracy Royce said very carefully. It is a very tight situation working with friends. I have seen MANY friendships broken due to working together. I've seen many dissolve and end with legal issues.

-Steven



Medium hta logoSteven Hamilton II, Hamilton Tax and Accounting
E-Mail: [email protected]
Telephone: (224) 381-2660
Website: http://www.HamiltonTax.Net


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