Author Topic: Looking for advice on partnering on a flip  (Read 322 times)

FIRERoad

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Looking for advice on partnering on a flip
« on: June 30, 2018, 06:49:34 PM »
Hi. I've been looking to get an investment property like a duplex or condos to start out with but I've been struggling to find something that makes sense.  And it is also tough taking that big step and not overthink things.

I have a coworker that is experienced in owning investment properties and doing flips.  We got to talking and I asked him for advice on some condos I was looking into.  He gave me fair advice.  Basically, it if I finance condo and buy them right I can break even or if I pay cash I can maybe make 4-5% return pretty passively.  But that seems pretty boring and low returns from what I have been reading.  And the condo would be out of state for me.  Plus side is that my mom lives nearby so I could at least see it/them a couple of times a year and not buying in some random place I never have another reason to visit.

He also mentioned that he was looking into a few rehabs and we got to talking about partnering up.  I have not been thinking about a flip or have experience with this but the area he is working in is appealing, the upside is better, and hopefully it is a relatively short term investment (3-6 months).  I took my bike up to the area today and checked out the properties from outside, neighborhoods, been looking at numbers myself and talking numbers with him.  I'm hesitant because I was on the path to looking at rental/cashflow property and this is different.  But, it is tying up about the same amount of money I would tie up on the condo/rental.  The potential upside in the short term is better and more appealing, the area it is in and the the potential is appealing, it is more exciting, and I'm learning/sort of working with a mentor.  It can also lead to subsequent deals if this works out for us and/or potentially increase my stash for my future investment properties.

He lives out of state but works remotely.  He has systems in place doing the leg work (realtor, contractor). 
I live within an hour of the flip.  I don't have systems or the knowledge but can come up with half the cash for the project for a 50/50 partnership.
We work on the same project at work.  I've met him in person before.  We interact multiple times a week on the project and should be for the next 2-3 years.
We have been talking and texting about the project and I even listened in on a call with his contractor. 
Gave him my thoughts on the neighborhood and properties I saw today on my ride. 

I think we are also both a little hesitant about the partnership because neither of us have done a partnership.
It seems win/win.  We are splitting the risk, splitting profit.  He has the knowledge and systems and frees up some cash for other deals, I'm local and can keep an eye on things, help, learn.

I've convinced myself that this would be a good way for me to take a first step.  He is thinking it over but interested (he brought it up in the first place).

I am working with a lawyer currently on my will and want to ask him about potentially drafting up a legal document/contract for this partnership.  But, I don't really know exactly what it is that I will be asking for or the legal lingo.  So, can someone point me in the right direction?  I know this probably happens all the time and has a name and I'm sure you fellow Mustashians are the right folks to ask.  I also welcome comments and thoughts on the situation. 

Thank you for your time and help!
« Last Edit: June 30, 2018, 08:06:30 PM by FIRERoad »

August26th

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Re: Looking for advice on partnering on a flip
« Reply #1 on: July 02, 2018, 01:23:32 PM »
I don’t have any experience in this area, but have you checked out the Bigger Pockets forum? I bet you’d find a myriad of opinions and advice over there, from people who have done exactly what you’re describing.

Best wishes!

FIRERoad

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Re: Looking for advice on partnering on a flip
« Reply #2 on: July 02, 2018, 03:14:21 PM »
Yeah, I just heard some thoughts on one of their podcasts but have not spent much time on their site.  I'll check it out.  Thanks.