Sweat Equity Partnerships ?
In this discussion I'd like to receive others perspectives on "Sweat equity partnerships".
After speaking with an attorney last week, he mentioned one of his clients being only eighteen years old and owning twelve income producing MF properties. I do not know the number of units in each property, but i would assume it's a minimum of 8-16 units. After asking some brief questions the attorney disclosed that the partnership was 50/50 ownership and the eighteen year old's percentage was "Sweat equity". Has anyone ever been in a similar partnership where you receive equal ownership and your percentage is "Sweat equity" from creating an RE acquisition model?
Any feedback is appreciated.
.
Just looking for a possible explanation of how this eighteen year old might have done it.
Who knows. Inheritance, social media influencer/youtube $, family money. The kid probably got some money somehow, then was smart and invested it. Good on him
There’s more to RE than building models and sending out LOIs. Other ways he could have earned equity.
Aside from the (very likely) possibility that it is a family deal where the dad/ mom or uncle/ aunt is giving their family a break, there are a few ways I can think of this.
This kid can be a straight hustler who got a property tied up that is prime real estate. He could have lined up tenants (not hard to do for a 2-8 unit property). At that age I would be doubtful he got the property some zoning variance or something like that- but hey, you never know.
50/50 seems high. But I have seen 10/90 off of sweat equity.
Something that I found while researching is equity can be contributed in various ways, but one of them can be an "idea". Unlikely, however if it was presented to an investor as a potential opportunity that's where sweat equity could potentially be given?
Everything is negotiable. Like you mentioned, equity can be contributed in numerous ways. Maybe the kid also agrees to manage the property and run the entire job. Maybe it can be a substantial remodel and he knows how to hang drywall and paint and redo the roof. So many scenarios that can be played out.
Aut nihil dolor ut debitis quia. Omnis impedit dolorum ipsum. Repudiandae dolorem necessitatibus est ut non eum porro. Occaecati voluptatem minus repellendus sequi voluptatem maxime est. Incidunt eum porro voluptatem repellat aliquam libero odio. Accusamus officiis minus dolores cum. Omnis ut tempora sunt error autem.
Pariatur atque laborum quasi illo quae. Occaecati atque est pariatur repellendus incidunt mollitia. Ea qui tenetur qui ut quasi vero.
Id sint non recusandae doloremque tempore. Quam reiciendis beatae deleniti delectus voluptates aut beatae.
Consequatur quisquam atque deserunt enim modi laborum error. Ipsum placeat odio dolores ratione dolores deleniti. Est enim ab reiciendis dignissimos tenetur itaque eaque harum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...