I am a successful real estate agent and I am developing a partnership with another very successful real estate agent. In addition to residential, he has equity in a property management company and a development business. I would like some guidance and insight into various ways in which we can structure our relationship (equity, profit share, referral, splits, etc). I need help from someone who versed in either real estate partnerships or business partnerships. Thanks.

Legally, there are many ways to structure the partnership, such as the ones you mention. It depends on who is bringing what to the partnership (money, knowledge, skills, time, effort, etc.) It also depends on the level of trust and need for safety of each partner. For example, if a partner wants to be assured that all of his/her principal and interest will be returned, then he/she would be most comfortable as a debt partner (like a bank) where the terms are secured by the real estate. If the partner is willing to take more of a risk for a greater return, then an equity partnership might work best. Then you both share the risk and returns, depending on your contributions. Keep in mind that a partnership is very much like a financial marriage. Things can look great going in but they often fall apart. So you need to hope for the best but plan for the worst with a good "pre-nup" contract so everyone is clear. I can help you with this if you want to protect your partnership going in, hopefully to have a long and profitable relationship. Hope this helps and best of luck!

Answered 5 years ago

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