Should I Give My Equity Partner The Deed?
I have an equity partner who is a very good friend. He trusts me with his money. I have been wondering why not just put the deed in his name and work under a Power of Attorney?
The question is really about FUTURE equity partners who I dont know.
Its Hard to convince them to invest with a stranger. Hard to convince them to give me 100% of purchase price + repairs.
They may only invest with me if I give them the semblance of control. They ask "what is to prevent you from going bankrupt and they will be screwed"?
Very hard to refute that so I wrote a strict contract that says I earned my 50% split when I buy. And if they give me a written revocation of contract they have to pay me 50% of appraised value within 30 days.
That gives me some protection.
I wont have ownership liability. But I can still work under the POA.
Is there any other problem you guys see with this?
It sounds ok to me. You may want to post this under a different forum, like legal, to get a better response.
Most of the the time your equity partner will want to be in a similar position to a HML or private lender with regards to their cash outlay. Say Purchase Price + Repairs = 50% to 70% of "After Repaired Value". As your equity partner, and the person with the Cash. They are KING. In My Opinion, They are going to want the title. If you default, their only recourse is the property and they have the most to lose. You can use a partnership agreement that will stipulate who is responsible for what, and how the proceeds are distributed upon sale of the property. It could also determine when and where you get the rehab funds. You might operate similar to the way a contractor would. Pull part of the money as a draw, do some work,. Get paid some more, do more work, etc until the repairs are complete. Everyone is happy, everyone makes money, Everyone wants to do it again.
Good Luck,
Jeff
get both your names on the deed and record a 1st mort. & prom. note to the investor. thats how its done.