Partnership Question

[LUCHINI]

Fam,

As much as hate partnerships, I think this is the time I give it a try. I have an opportunity to acquire a real estate that includes a nightclub and I have potential investor. Now the only way he will do the loan is if I bring him in as partner. Basically, I will still pay back the loan in conjunction to giving him equity of the company.

For some of you here that know about partnership, is this how it works?

 

[Mr Lucifer]

Post up some more information
are you primarily interested in the night club or the real estate? because you can have different terms of partnership for the business and the real estate. basically, negotiate the terms on the real estate end of the deal, that will give you a favorable term for the lease and ownership of the nightclub

If you're primarily interested in the real estate, then get yourself a management fee annually to be deducted from rent. In the end, if the guy is bringing in the money, and putting himself on the loan, he's going to expect a large piece of the pie - He could reasonable expect more than you, since you're "only" putting the deal together.

If its a FANTASTIC deal, try tracking down a hedge fund that does real estate development, and you may get more favorable terms with them, but be careful not to divulge too much information to them.

Any other questions, hit me up.

 

[Mr Lucifer]

by the way - if you're in atlanta - don't fall for the common bullshit scam "appraised 100K, for sale at 60K"
every other property is being sold at 60% of value - which means that the actual value is 60K and not 100K
I'm not sure how RE savvy you are, but appraised values are determined by taking an average of comparable sales - meaning if 1 property was sold for 100K, and 9 other similar properties were sold for 60K, the appraised value should be 60 - 100K was only a freak sale

 

[BoyJupiter]

He better be willing to put in the same effort and ethic as you do. Too often I see cat's use the partnership ultimatum to lock their fellow investor into a onesided relationship. If you have ANY doubts about his or her work ethic and business integrity, drop them or pitch the LLC to them.

 

[Raptor ES]

Make sure the partnership as a "divorce" clause along with the buy out terms spelled out. I entered into a partnership with a couple of guys and as soon as I landed a million dollar deal they wanted to remove me and keep all the profits.

Run what ever you are doing past a lawyer.