I own a house that needs rehab and I want to keep it long term as a rental. I have a money partner who is willing to provide all the funds necessary to purchase and rehab the property and be my partner long term as co-owners.
What is the best way to structure this deal? I thought about a JV agreement, but are there better ways to enter into this partnership? I have an entity (LP), but I’m not sure if this is the best way.
Thanks!
I think the best way to do it is with a JV agreement.
Glad to see you do not want to use a bank and refinance it.
Congrats on finding the private money partner.
Jim
no partner -
The guy needs to be treated as a financer not a partner. Make a note for the dollars provided. Have him get a mortgage on the property. Give him no say so in the running or operation of the deal. Pay either interest only for a 3year balloon note. Or principal and interest on a 10 year deal.
Tim,
There are different ways to set up a deal. It depends on what you really want to so and who you are considering as your partner. Different structures come with different legal assumptions.
In any event, plan for a divorce later. By that I mean the deal has to be clear how you two will separate. You also must plan for the unexpected. One of you could become disabled or something else. If your ‘partner’ is married and they get divorced you might end up with the ex as your new partner.
Assume for a minute that for some reason a judge is asked to read the agreement and dissolve the ‘partnership’. Neither you or your partner are able to speak (dead, medically unable to participate). Will the judge know what to do?
Stuff happens so the legal agreement should cover the unexpected. Most of the time nothing will happen. Then again, it is best to be prepared just in case.