Working With Partners/family?
How do you guys structure the arangement when you have family that wants to invest in your rehab business? They want to get in on a good thing.
I've been told that it is not a good idea to have too many partners involved in the day to day decisions of how to run your business. (too many cooks in the kitcnen)
I think it is a good idea to keep these people as silent partners and just give them a straight percntag on the money they loan you to do the rehab say 6-8%.
Do you give them any more additional funds from the profit? Wat do you think?
Wanting to do good business and keep the family happy,
jackbuilt
You can either do a percentage return or a percentage of profit, you're call, I like the percentage return idea.
[addsig]
I've done numerous joint-ventures with friends, family and others.
I recommend you try a 'per project' deal first, before committing to a long term relationship.
For example, say you find a house that needs rehab. Your cousin puts up the money for the down payment and secures the mortgage, you handle the grunt work and rehab.
Once the house sells, you split the profit 50-50 (or whatever you think is fair) and then decide if you want to work another deal together. You may not, it's possible you'll find your partner is a pain in the ass, or vice versa. The nice thing is, you found out without getting into bed together for years.
From my experience, most real estate partnerships are done on a 'one-off' basis, meaning that each deal is a stand-alone business.
The big boys do it this way...Trump is a partner in hundreds of businesses, each its own entity.
Being family, why don't you just help them start their own business. You could share your resources with them - lenders, contractors, suppliers, etc. Then they could pay you a fee for helping to oversee their first couple of deals until they can go on their own. You would hate to create competition. Surely, there are enough deals for both of you.