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When does wfh end in EY GDS?
What's your controversial Houston opinion?
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50% stake and $0 down is unheard of and you’re getting taken advantage of. They need to put money into the deal.
Most silent investor offered to me seem way out of balance in terms of ownership stake. Rather than negotiate I just walk away because it’s so far off, but what is reasonable?
Subject Expert
Depends on how much work is involved. If it’s just a standard long term rental, 50% stake for sourcing and then “managing” the property is wild. If it’s a short term rental, or there’s major renovations involved, then it might make more sense.
If you were to own the property outright and just pay him to manage it, how long would it take to pay him off? So say you’re charging $2000/rent. If you’d pay him 5%, he gets $100/month. His half is $20,000 that you’re covering - it would take him 200 months (more than 15 years) until he works off that equity. Now if you’d be paying him $500/month and he’d be paid off in less than 4 years…suddenly you’re technically making money on him.
Personally I wouldn’t like my partner not having any stake in the equity. Would he be on the loan?
Subject Expert
Long term rental management is usually 8% to 10%, unless you have scale.
Short term rental management is anywhere from 15% to 30% depending on responsibilities
Sourcing the deal deserves some level of equity but if he’s also expected to manage then yeah he deserves more than at least 10-15% especially when it comes down to picking up the phone deal with tenant issues - Ac breaks, leaks and floods (all of which I’ve dealt with in the first 9 months of owning my own property)
At end of day you have cash, he doesn’t. He has time to manage, you don’t (unless you do). If he’s not bringing value or working his equity with no money in the deal then walk.
Subject Expert
I’d rather pay a $5k “finders fee” than give someone a stake in the deal