Splitting Profits Amongst Partners When Putting 0 Down

3 Replies

I am completely new to REI and have two investors willing to partner with me on a rehab opportunity. Let me give you the scenario:

  • WE WOULD BE APPLYING FOR A FANNIE MAE HOMESTYLE LOAN, 
  • THE 2 PARNTERS WOULD BE COMPLETELY RESPONSIBLE FOR PAYING FOR THE DOWNPAYMENT
  • THEY WILL BE PAYING THE INTEREST ON THE LOAN EVERY MONTH UNTIL THE PROPERTY IS SOLD
  • EVERYTHING WILL BE PLACED IN MY NAME (LOAN, HOME, ETC), 

They have offered me 10% of the profits, with them taking 45% each on this deal since they are placing the original downpayment. Is this something that makes sense? I understand that without the down payment the deal cannot be done but since everything is in my name, am I not at risk as well? Just wondering if the split of the profits make sense.

Any guidance you could provide would be greatly appreciated. As I stated, I am just trying to get my foot in the door and want to make sure I am not setting myself up for failure. 

Let me know your thoughts. 


Thanks

Aside from them using you as a front on the mmortgage what are you contributing to the deal.

perhaps you don't know how the down payment Works in a Traditional Bank mortgage. the down payment money has to sit in your account for 3 months and you have to explain where it came from can't be a gift or come from your friends. money that you actually have earned. so you may have people willing to front the down payment the bank underwriting process would discover that and you won't get past your doc inspection. there are portfolio lenders out there Lima one and Angel Oak who don't do the full doc or debt to income calculation expenses are higher but even with them the down payment has to be sitting in your bank account. so your friends would have to be okay with sending you the down payment cash that you would deposit into your bank account. to pull this off you have to go to portfolio lender route at the very least National Vendors like lima one and Angel Oak would do this but your friends will have to deposit the down payment into your bank account

I would receive the downpayment and would have it in my bank account. I know it has to sit for 3 months, but am a little confused about why they wouldnt allow me to use the funding if it was given to me by friends or family. It would be income that would be reported on and that I would ultimately have to pay taxes to.

Again, I am sorry I am such a novice and realize this is probably an extremely stupid question.

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