Real Estate Joint Venture?

Question

I found a great investment property to buy but do not want my name on it. Is it reasonable to sign a deal with a partner where he buys the property under his name, he takes care of arranging the mortgage and downpayment, then we flip it meaning sell it within a couple months and split the profit 50% 50%? Is it fair to expect 50% of the profit becasue I found the property he would not be able to find without me, although I am not offering to pay anything/finance it? THANKS

Answer 1

Sure. To be honest, I think even a 90/10 deal is fair as long as both parties agree to it. With these types of agreements, you want to make sure each person that is apart of the agreement understands what the duties of each other members are. This should all be hashed out beforehand. If your only obligation is to find the properties, and you both feel that service warrants a 50% cut then go for it.

By assuring ahead of times everyone is aware of each others roles in the agreement and agrees on compensation per said roles, everything agreed to would be considered fair. Also, by defining roles it is easier to hold each other accountable for there part of the venture.

Answer 2

You can take 50% but not "just" for finding the deal. Sooner or later your partner is gonna learn that you screwed her.

Here is what I suggest you do to do this:

1. Write up an agreement that you both will take 50% each from the final profit after sale. Email me, I can send you one.
2. You both will share all expenses. Different fees, down payment if aplicable, rennovation, sale costs, etc.
3. You both will give it full effort during purchase process and sale process.
4. Your partner will undertake the mortgage.
5. Both of your name will be on the deed. (this is optional step. You can do this after the closing via quit claim deed if you want. You already have an agreement)
6. Send me a consulting fee check!

Then when time come to sell it, let the escrow know that 50% of the settlement needs to go to you. Escrow will want your SSN to report your income. You partner will only pay tax on the profit she makes. You report your income and pay your own tax.

HTH.

Answer 3

If you're not on the deed, you risk losing out on everything. Real estate contracts must be in writing and if you are not on the deed, you are NOT an owner of the property.

What makes you think that the other party couldn't find the property without your assistance? Sounds a bit over-confident to me.

Expecting 50% return while contributing what appears to be absolutely nothing from you appears pompous at the very least.

IMHO, your "partner" would be an idiot to accept your "deal."