Partnering with another investor? - Posted by Marco Antonio

Posted by Del-Ohio on October 05, 2003 at 12:05:56:

Write it up as a partnership or joint venture. If it is written up as a loan this is where you could potentially run into usury problems. Its in the wording of the contract.

We just did a similar deal with one of our rehabbers on a property that he owned but did not have the money to do the rehab.

The first thing we did when we gave him funds was added our name to the deed of the property. You could take a first martgage if it is not already encumbered but we felt safer being added to the deed with half ownership in our case.

I can email you a copy of our agreement if you like.

Del

Partnering with another investor? - Posted by Marco Antonio

Posted by Marco Antonio on October 05, 2003 at 10:03:41:

A local wholesaler/rehabber I know approached me and needs about 6-8k to finish up a rehab he is working on. I guess he just has too many projects going at once. I am confident in his abilities and he does have a good track record so I have no problem loaning him the money for a short time. Does anyone have a sample “joint venture” type agreement I could use, or should I just write it up as a promissory note? The thing is, I am going to lend him the 6-8k and then he is giving me 25% of the profits when he sells the property over the next 2-3 months. What kind of agreement should I use for this? Thanks for the help!

Re: Partnering with another investor? - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on October 05, 2003 at 10:26:25:

So are you going to make a loan, or do a joint venture. You say both things in your post but they are not the same.

A joint venture would give you part ownership of the property, while a note would give you a lein on the property (to secure your note), but no ownership interest.

Re: Partnering with another investor? - Posted by Marco Antonio

Posted by Marco Antonio on October 05, 2003 at 10:28:37:

I don’t think it matters to either of us - what do you think would be the logical way to do it? Basically I am just going to loan him say 8k to finish up the rehab then the property is going to be sold and we split the profits 75% for him, 25% for me. Thanks!

Re: We do not know - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on October 05, 2003 at 11:03:27:

the sale price of the house. 25% of (X) could well generate a usurious return on your $8,000 but we do not know because we do not know the sale price of the property or the actual amount of the profits.

I would suggest a partnership agreement specific to your state; and I would suggest that an attorney draw it up for you.

Re: Partnering with another investor? - Posted by phil fernandez

Posted by phil fernandez on October 05, 2003 at 10:45:53:

I’d let your attorney draw up the paperwork. You don’t want to get anything wrong that might put your $8,000 at risk. There could be a lot of " what ifs " that your attorney can incorporate in the agreement. You want to make sure your agreement is legal.

Re: We do not know - Posted by Marco Antonio

Posted by Marco Antonio on October 05, 2003 at 11:26:30:

Why do I need to worry about usury? Are you saying that I can’t make a loan of X in return for Y% of the profits on the deal? I hear of people doing this all the time. No?? What am I missing? Thanks!