Home Buying in 91766>Question Details

Djhabitat, Home Buyer in 90723

buying a house with a business partner what should the split be if everythings is in my name and he puts the down. buying rental property?

Asked by Djhabitat, 90723 Thu May 12, 2011

i will be placing everything under my name... he will be giving me 6500 for the down and i will be putting in 3000. I was approved for 300k. now the plan is to rent a rental income property three units. what should be the split between us 5o/50? 70/30? the only reason im thinking about partnering up i wouldnt have to wait a couple more months to complete my down and hes also a contractor which any thing that needs to be fixed with the properties he would do it. all the advice would really help... thanks

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Answers

8
There's really no legal requirement that the split be 50/50. You have to evaluate each other's contribution to the joint venture and negotiate the split. Contribution may come in the form of capital contribution or services.
0 votes Thank Flag Link Fri Aug 10, 2012
Number one, from the classes I have taken, a corporation or LLC would be much better than a partnership. Talk with an attorney to get the details. Also, make sure EVERYTHING is in writing. Have a well written, detailed business plan. make sure the numbers work.
Whenever you go into a business relationship, you need to have an exit strategy.
the mentoring idea is a great one too.
Hope it works out well for you.
0 votes Thank Flag Link Fri May 13, 2011
Djhabitat,

I agree with Brett that this sounds like an FHA loan, and if that's the case the bank will be looking to see that you're going to occupy it.

I also agree with Sarah and Kathy that if you're seriously considering buying this in a partnership situation, you really should discuss this with a real estate attorney first. The advice you get will more than offset the expense. If you need a referral for a great RE attorney in CA, I am happy to provide one.

Thank you,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes Thank Flag Link Thu May 12, 2011
Djhabitat:

Hit the brakes and look for a mentor or mentoring group and then keep asking questions until you stop getting answers! Identify the most common mistakes a "newbie" makes.

Reviewing these sites may be a good idea so you get an appreciation of what you may not know:
http://www.nationalreia.com/
http://reia.org/
http://www.creonline.com/real-estate-clubs/ca.html

Never mistake "motion" for "action"!

Best, Steve
0 votes Thank Flag Link Thu May 12, 2011
I don't think this is a good situation for a partnership. If you are going to be partners, then both of you should be on the loan and on the title.

In this situation, I think it would be better if you borrowed the money from the other party, and paid him above-market interest. Or just wait a couple of months until you can afford to buy by yourself

This sounds like an FHA loan. If it is, you will be required to live in the property.
0 votes Thank Flag Link Thu May 12, 2011
A lawyer is a must. You would probably want to set up a formal partnership or LLC to provide for all the details about what happens to the property and assets if one of you wants out, dies, has outside financial concerns, etc. Don't hurry into anything.
0 votes Thank Flag Link Thu May 12, 2011
The best advice I would offer is contact a real estate attorney. A transaction like this could get complicated.

Have it done legally & correctly the first time around so both partie are covered.......

Good luck!
0 votes Thank Flag Link Thu May 12, 2011
Why do you need a partner? you got $3000 down and you are taking responsibility of a note for
$300,000, You have all the risk, get $6500 more and buy this yourself, then you have no split. This guy you are partnering with gets a hell of a deal if he gets 50/50 or even the 30/70 split, you get stuck with all the risk. If the property hits the skits you lose $3000 and you get held to a $300,000 loan, he walks with a mere $6500 lose. Please look at this business situation and see the sucker clause you will be signing into. Why is all in your name? He has bad credit, them guess what, if you hit hard times and you turn to your partner for help, he can't help you he has no credit.
This looks like a one person deal, hell if you need a partner like this, I'll go 50/50 with you and give you $10,000
0 votes Thank Flag Link Thu May 12, 2011
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