Property partnership fair split?

[Peter99]

Hi guys,


I was wondering if somebody could give me some input / guidance to help me work out a property partnership question.


A friend and myself bought a BTL property as a business venture. She brought in 50k and I brought in 15k. we then got a BTL mortgage in both of our names for 200k. She earns a lot more then I do (10x in fact) but my income was taken into consideration. I have taken full responsibility for maintaining the property and managing the tenants.


We are now working out how to balance any increase of equity and the rental income.


Should we simply say that we share it all 50:50 but upon sale of the property we both receive our original investment first (50k for her and 15k for me)?


Should we work out a more complex way of splitting the rental income and any increase in equity that takes into account things like her larger portion of the deposit and how her salary generated more of the mortgage then mine? Plus the fact that I manage and maintain the property?


Does anybody have any other models for working out the split?


Is there any general rules of thumb that we can take into consideration?


Thanks,


Peter

 

[nmb]

I think you have put the cart before the horse because these issues should have been sorted out before the mortgage was signed and the property was bought. There are some simple questions I would ask such as:-

Are any of you putting additional capital into the mortgage repayments or does the rental income cover this?

How is time on the job split? How many hours per week do each of you spend managing the property and the tenants?

How was the arrangement set up? Is it a company or a simple partnership?

 

[Peter99]

Hi, thanks for your reply,

The rental income covers the mortgage and more so no more capital needed,

The time on the job probably takes me say half a day a week now that everything is setup,

It is a simple partnership in our joint names,

I agree that we should have sorted this all out prior... We have a good relationship however but just need a bit of guidance on how to work out what is fair...

 

[Longterminvestor]

I think that you need to sit down and go through all aspects of your partnership to find some common ground. Unfortunately there will be areas where you will disagree and you perhaps need to bring in a third party to mediate. This is a common problem for many people looking to move into the property market, a reluctance to have the difficult conversations in the early days.