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Started By
Message
Buying Property....
Posted on 2/22/10 at 1:56 pm
Posted on 2/22/10 at 1:56 pm
So Im thinking of going into a real estate deal with a family member, and the family member has the money to invest in the investment and will basically be silent. We are Buying some run down apts, in a good location, fixing them up, and renting them out.
It was my idea, but my family member will be the "backer" i guess you could say. I will also be the point guy for everything, the family member will just bring the checkbook to get the deal done.
Anybody else ever dealt with a silent partner in something like this or in anything?
It was my idea, but my family member will be the "backer" i guess you could say. I will also be the point guy for everything, the family member will just bring the checkbook to get the deal done.
Anybody else ever dealt with a silent partner in something like this or in anything?
3
Posted on 2/22/10 at 2:03 pm to NoBama
Partnerships are tough, especially when there is money involved.
You truly don't know someone until you have dealt with them financially.
You truly don't know someone until you have dealt with them financially.
Posted on 2/22/10 at 2:14 pm to Will Cover
quote:
Partnerships are tough, especially when there is money involved.
You truly don't know someone until you have dealt with them financially.
Yeah...I guess thats what im asking. The "Silent" Partner is a tough thing IMO. If I were the one putting most of the money up it would be hard for me to sit back and be Silent.
Posted on 2/22/10 at 2:15 pm to Will Cover
NM
This post was edited on 2/22/10 at 2:16 pm
Posted on 2/22/10 at 2:52 pm to NoBama
If I was the partner putting up the money I would want to control the deal, ie ownership and distribututions. I would definitely have an operating agreement that spells out who is responsible for what and how income/profit/expenses will be paid handled through the venture. Put it this way, if I was putting up $100k for a property I want to know I am protected and paid first out of sale proceeds and sweat equity participates in any profits after that.
Posted on 2/22/10 at 3:07 pm to NoBama
This sounds like something that could turn into a disaster absent a very specific and well-thought out contract. I cannot stress enough the importance of a solid contract in this type of situation.
Posted on 2/22/10 at 4:39 pm to NoBama
As an attorney, a few words/phrases of the original post disturb me:
Each one of these could be the downfall of the deal. Have you ever fixed up and rented property before? Perhaps an apartment building might be a little to large of a project for the first time.
quote:
real estate deal with a family member
quote:
silent partner
quote:
Buying some run down apts, in a good location, fixing them up, and renting them out.
Each one of these could be the downfall of the deal. Have you ever fixed up and rented property before? Perhaps an apartment building might be a little to large of a project for the first time.
Posted on 2/23/10 at 8:54 am to TigerDeacon
quote:
Each one of these could be the downfall of the deal.
I guess the Backer in my deal wouldnt be so "Silent". I have a little experience with this, but the guy backing has ALOT of experience in it.
So, I would be the point guy like I said, and he would be in the background, but I would be helped tremendously by the money guy because it is pretty much my first venture and he has done many, many times.
Posted on 2/23/10 at 9:02 am to NoBama
quote:
I guess the Backer in my deal wouldnt be so "Silent". I have a little experience with this, but the guy backing has ALOT of experience in it.
So it's more he's helping you get your feet wet than just floating you the money to get the deal done? If he's got good experience with this type of business, it could work.
But as someone said in a post before, spell everything out on paper while both of you are on good terms with each other.
Posted on 2/23/10 at 11:14 am to LSU0358
quote:
So it's more he's helping you get your feet wet than just floating you the money to get the deal done?
Thats exactly it.
Posted on 2/23/10 at 12:35 pm to NoBama
Ignoring everyone else's comments about business dealings with family members, silent partners, etc. for the moment, have you really investigated the capital requirements for the partnership? Specifically, what are the TRUE costs of renovating the property. If it is in East Baton Rouge Parish, you may be required to bring the structure and parking up to current code requirements, depending on the property's zoning classification. Based on the number of units in the apartment, you may be looking at ADA compliance, off street parking constraints, fire and safety enhancements, wiring and mechanical upgrades, not to mention the cosmetic changes you already propose.
It is worth a call to both Planning and Zoning (225) 389-3144, as well as Permit & Inspections (225) 389-3226. I have "bailed out" several clients that were past the point of no return before fully understanding the ramifications of what most perceive as just cosmetic improvements.
A wise, wealthy, rich man once told me, "It don't get any cheaper to walk away from a transaction than right now. Do your homework young man." Not trying to talk you out of going forward, but this may not be the project to "get your feet wet." Don't know your experience or background, just offering the information, FWIW. GOOD LUCK.
It is worth a call to both Planning and Zoning (225) 389-3144, as well as Permit & Inspections (225) 389-3226. I have "bailed out" several clients that were past the point of no return before fully understanding the ramifications of what most perceive as just cosmetic improvements.
A wise, wealthy, rich man once told me, "It don't get any cheaper to walk away from a transaction than right now. Do your homework young man." Not trying to talk you out of going forward, but this may not be the project to "get your feet wet." Don't know your experience or background, just offering the information, FWIW. GOOD LUCK.
Posted on 2/23/10 at 12:49 pm to Will Cover
quote:
You truly don't know someone until you have dealt with them financially.
Generally true, but I had a totally opposite experience with my brother when our parents died. We had a 'who is the most cooperative' contest.
It was like:
Me: "You take it, you need it more than me."
Him: "No, you take it. I insist."
All of the funeral arrangements, execution of the will and division of property not covered by the will was concluded in less than a week. We have always been great friends and still are.
Posted on 2/23/10 at 5:19 pm to Zach
quote:
Generally true, but I had a totally opposite experience with my brother when our parents died. We had a 'who is the most cooperative' contest
quote:
We have always been great friends and still are.
Nice to read and hear...maybe because it is so rare...
Posted on 2/24/10 at 9:41 am to Zach
quote:
Generally true, but I had a totally opposite experience with my brother when our parents died. We had a 'who is the most cooperative' contest.
It was like:
Me: "You take it, you need it more than me."
Him: "No, you take it. I insist."
All of the funeral arrangements, execution of the will and division of property not covered by the will was concluded in less than a week. We have always been great friends and still are.
I can second this.. Lost my Dad last year and everything went to me and my one brother. Everything went as flawless as i think it possibly could... There may be some tension later with some family property, but we will cross that road when we get there...
As far as still being friends, that we are. We also own a small LLC together..
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