What does 50/50 mean?

2 Replies

I assume splitting a deal 50/50 means you and your partner each take 50% of the monthly rent and/or 50% of the profit when selling. Are these really the only two things that partners are looking for, or are there other things a partner investor may be interested in claiming?

Thank you for your reply!

I've seen structures where certain investors get the depreciation writeoff and others get the cash flow. It's a complicated structure which only makes sense in larger transactions, from my perspective. In the deals I do, we're always talking about splitting cash flows and returns at sale.

I agree.  Depreciation is a big carrot for passive investors that have W2 jobs.  If they only own their primary residence, this gives them the opportunity to claim part or all of the depreciation each year.  It's also important to remember that money needed for repairs (outside of the reserve the property has) needs to also be put in 50/50.  When I partner, there is a clause that states that if one of the partners cannot contribute, the other partner can lend them the money or depending on the size of the contribution needed, capture some of the partner's equity.