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I have been discussing with a friend a potential arrangement for buying a multi-unit property. I live far away so we'd been talking about me putting down 67% of the down payment with him putting down 33%. He would handle all property management and buying of the property (with my input and consent). Then going forward we'd split the net profits and equity 50/50. We'd be buying in the range of 550-650k range with a 25% down payment, so I'd be putting down 16.75%. What are your thoughts? TC: 250k YOE: 5 #stocks #investments
What if he’s a bad property manager and you need to fire him?
Hell nah. Never do business with friends like this. Back the fuck out and run!
“A borrower nor a lender be.”
No. Property management fee is normally 8-10% of rent. Go with that. He'll answer all the late night phone calls, collect rent, find tenants, evict them for non payments, and find plumbers/etc to repair things. The thing is, he probably doesn't want to do those things. He wants your massive equity upfront, and then he can slack on other things. What you should do is go in on the property together at whatever ratio. Then hire a property management company at 10% rent, and neither of you have to lift a finger but to greenlight repairs and collect a paycheck. Prorate the paycheck. If you're doing a mortgage then you need to figure out how to split it, but probably at the same ratio as the equity, for simplicity?
Easy No
Never do business with friends and never become friends with business partners. A person can either be your friend OR business partner but NEVER BOTH at the same time
No