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Hi, I was hoping for some advice on this scenario.FYI.. I have two HMOs not far from London making £1200pcm profit deposit and refurb costing £105k each to get going (although some mistakes were made initially). My costs for training (32k) and mistakes (~another 32k) even though i have now recovered these through remortgaging and profits.My cousin in Norway has recently sold his (unrelated) business and wants to go into business with me. I agreed to go over there to explain what i do, the pitfalls and worst case scenarios, and see if we can put together something that works for both of us. Initially he just said he'd help me by essentially lending money on a low interest rate, but now hes looking to be a business partner and very keen on a joint company with 50/50 split of equity with me having a management fee. If it were to go through we would draw up a signed legal document for it etc. That deal sounds rubbish to me as i have done the training, learned about pitfalls at some cost, will source the property and manage it. Looking around it seems that with most JV ventures the investor would provide most of the upfront cash and give the one doing all the work 30-50% of the equity (after investors initial investment returned should property be sold) and then split the profit. So is there a deal I could propose that would be worth it for me and might be acceptable to him? Any other thoughts, ideas or experiences also appreciated!
Don't go into business with friends or family
Thats just a blanket statement. I see family going into business all the time for collective benefit. He would be a silent partner about the day to day runnings as he is not living in the same country.
I should add that the business he just sold he built up over 20 years he founded it with his best friend 50/50 who became a mostly silent partner doing his own job, so he understand the dynamics of such an arrangement.
Jonathan Clarke. http://www.buytoletmk.com
Thanks Jonathan, that was very concise. Your right I feel he is not valuing my input and if i cant reconcile that with him amicably then i wont do any deal.The JV deals you have done, sound like a straight forward loans and 4% is a great rate!If you did a deal where you started a new business for a series of properties, where the other side was silent and wanted to split the money invested/equity 50/50, whats the worst split of profits you'd accept? Would you attach any other major conditions?