How Do I Structure 3-Way Partnership Profit-Wise?

[Guest Bill in Vegas]

Hello Investors,

I have to laugh at myself. Each time I come up with an ideal or obstacle I wrestle awhile with how to implement it. Then it finally dawns on me "Oh, ask you guys" duh. LOL. Here is my latest quandary.

 

I have been birdogging for $1200 per house for this particular general contractor. I am putting together a working partnership with a Doctor (the money/superb fico score); and this Investor/General contractor (the rehab guru); and Me the (finder of houses). None of use can really do as well without the other. Except the contractor, does have great connections. He has a partner who has a mortgage company and is a real-estate broker on paper thus has access to a key and MLS.

 

My question is this how should the profits be split? Let’s say average profits per house is 15k in pocket net after all expenses. I am not sure how to ask for more of the pie here, this is main fear. We three meet for dinner the 20th.

 

They both are decent levelheaded guys. The MD wants me and him to do deals and split 50/50. I told him not for a year until I really understand and get educated on the business. I don’t want to lose his or my money.

 

 

Thank you in advance,

Bill

[MichaelC 160]

Hello, Bill, and welcome to The Naked Investor. If you like our community here, please don't hesitate to register and become a regular. I'm sure you have much to contribute to our new and growing board.

A quandry, indeed, but a good one as I see it. You describe the other two gents as "decent and level headed". So, you asking for a fair share for your efforts is not unreasonable. They probably won't think so, either. In fact, the good doc has already offered a 50/50 split if you'll work some deals with him.

Seems to me you just need to settle on an amount before sitting down to dinner. Don't go there uncertain of what you want. You need to figure your bottom line, and you want to seem professional and organized.

At the meeting, if you can, it would be greatly beneficial to you to try and get the other two to quote you a figure first. We are all aware, (at least we should be), that in negotiations he who talks first loses.

For example, you may be thinking $2000, and your partner may be thinking $2500. By keeping quiet you just made an additional $500 per deal.

If you are unable to make your partners speak first, then you need to state what you want and, more importantly, why. Have some reasons to back up your position.

Based on your description of your partners and how things are working between you, I think you'll be fine. It sounds as if you've put together a mutually beneficial partnership. Let us know how you do, and stick around. Bill.