Is It Possible To Partner Profitably On A Rental?
My partner and I typically do short sales and flips together, but recently found a 4plex that needs some rehab and some tenants and it will cash-flow nicely.
We are trying to figure out the best way to partner on this in the sense of dividing the profits and responsibilites so that we are both happy with the deal.
Does anyone have any success/horror stories along these lines?
I'm much more inclined to go it alone when it comes to rentals to keep things simple, but I'm wondering if there is possibly a benefit to working with another investor when it comes to buying and holding?
Thanks!
posherov
Put together an LLC, write up the documents and timeframes, outline specific duties and responsiblities as well as division of profits. This eliminates 99% of the potential problems.
sallen,
thanks for the response, though it didn't really address my dilemma.
we already have an LLC and all the rest of that...
Upon further evaluation, we decided that we will only do flips together and not buy and hold rentals. It is simply more profitable to do rentals on "your own".
I guess I was just wondering if anyone has a successful (smaller) partnership/LLC where they do really well financially and logistically while sharing everything with another person who is not their spouse.
It's kind of a broad question, so I can see why no one has really commented on it.
cheers,
posherov
Partnerships are simple yet complex. I am sure prior to coming together you discussed with you partner how complex transactions will be handled in the name of the LLC. If not, let this be a lesson to future partnerships.
If your relationship is solid and the investment has a strong return. It may be time for each to separate and work independently. Use the partnership for one type of investing (i.e. SF flips, L/O's, etc.)
Partnerships are a fantastic way to get off the ground but may introduce difficulty when complex transactions occur.
Good luck,
Eric & Rosa
[addsig]
I use as partner on cashflow deals and it works great, we are both under an LLC and we split all costs(money down, repair) and split all profits. It is nice in that one of us can go out of town without worrying about managing rentals and we divide duties (marketing, negotiations, showing properties, contracting, etc.)
It is someone I absolutely trust and is a work-aholic like myself, I would make sure a partner is of the same mindset, work ethic and trustworthiness as you are.