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Real Estate Investing Forums | Real Estate Investing | Carlton Sheets, Beginners, Courses, Gurus, General Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Adding investors and how to split profits
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Lgemini
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« on: December 02, 2017, 01:23:27 PM »

I always come here when I need  help....so here goes. I live at the beach and it is a great market for renting vacation properties. I signed a lease for a 1 bedroom across from the beach for $700 all utilities included. In the lease it states I can host guests there without me. I brought in 2 more people to help pay rent on slow season. The property is booking fast and I see a good roi within a couple of months. After all expenses are paid....how do I split profits. I have one person I brought in that has about 45% in it. I have about 40% and the last person lives out of state has 15% in it.
The one with the smallest amount in property does want to come down whenever he wants and stay week-ends and would like to receive a profit. The other 2 people ( including myself) want it strickly for a roi. What is fair? Is there any kind of program showing how much each person has in property and expenses paid out on property. What would you do??  help   Thanks so much!!! We are starting to  argue about what is right. I am sure this can be worked out where everyone is happy  bs  banghead
Btw my thanks to the people that have answered me before and gave me some great advice that has helped me move from Ga to living on the beach by there advice! The seasoned investors are the best!!  beer
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javipa
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« Reply #1 on: December 02, 2017, 03:05:45 PM »

Partnerships are like marriages between the rich guy and the gold-digger.  Where the rich guy needs a prenup.

Meantime, it seems like everyone wants their cake and eat it, too.

The reality is that the gold-digger partner (15% guy) is consuming his share of the profits by living rent free on the weekends at the beach.

So, the solution seems to be to deduct the profits from gold-digger's share of the profits by whatever time he spends in the beach property.  And this would go for everyone.

How to do this is enormously complicated.  You need to sum up the total income for the month, less the expenses, which include any days the partners spend in the property, and then divide the balance by 45%, 40% and 15%.  Then you total each partner's number of days spent at the property, multiply that by the average daily rental rate, and deduct that amount from his share of the profits.

I'm sure I blew the calculations above somewhere, but that's the best I can offer for free.

Next time, try to "marry" fewer people at a time, and get everything in writing, BEFORE you climb in bed.

Meantime, can't you and the other major partner each take up a 7.5% slack, and boot the gold-digger partner to the street?

I mean why put up with major crap from a minority partner?  Just asking.
« Last Edit: December 10, 2017, 05:34:42 PM by javipa » Report to moderator   Logged

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Lgemini
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« Reply #2 on: December 02, 2017, 03:38:54 PM »

 lol Great response! I was hoping you would see this and respond. You have given me advice in the past that was profitable! I needed another seasoned investor opinion to make sure I am on the right path....I am in an area that has so much potential, however I don't have much income and credit so I just keep climbing slow and working my butt off.....wish it was faster....thank-you again!
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BrantleyMos
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« Reply #3 on: December 10, 2017, 08:46:21 AM »

Partnerships are like marriages between the rich guy and the gold-digger.  Where the rich guy needs a prenup.

Meantime, it seems like everyone wants their cake and eat it, too.

The reality is that the gold-digger partner (15% guy) is consuming his share of the profits by living rent free on the weekends at the beach.

So, the solution seems to be to deduct the profits from gold-digger's share of the profits by whatever time he spends in the beach property.  And this would go for everyone.

How to do this is enormously complicated.  You need to sum up the total income income for the month, less the expenses, which include any days the partners spend in the property, and then divide the balance by 45%, 40% and 15%.  Then you total each partner's number of days spent at the property, multiply that by the average daily rental rate, and deduct that amount from his share of the profits.

I'm sure I blew the calculations above somewhere, but that's the best I can offer for free.

Next time, try to "marry" fewer people at a time, and get everything in writing, BEFORE you climb in bed.

Meantime, can't you and the other major partner each take up a 7.5% slack, and boot the gold-digger partner to the street?

I mean why put up with major crap from a minority partner?  Just asking.

That's a great analogy for this if I ever heard one Javipa. So the advice is to avoid adding more partners when ever possible?
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javipa
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« Reply #4 on: December 10, 2017, 05:38:49 PM »

Yes, it's wiser and more profitable to involve as few people in a given deal as possible. 

Richer partners generally bite their nails less, and 'poorer' partners tend to be in your hair more.
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Bluemoon06
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« Reply #5 on: December 12, 2017, 11:18:28 AM »

Partnerships are the worst business form but necessary sometimes.  Anything with more than 1 head is a monster.  The key is define everybody's responsibilities.  Manage expectations is the key.
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Real Estate Investing Forums | Real Estate Investing | Carlton Sheets, Beginners, Courses, Gurus, General Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Adding investors and how to split profits
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