Buying a Duplex with partner

I looking at buying a duplex with a family member (brother and sister in law) and have several questions. I am planning on using a VA loan and splitting the closing costs with the other party 50/50. I plan on living in one unit and renting out the other unit. We plan on putting everything in a contract so there is no problems in the future as to who is responsible for what. I am trying to make the deal as fair as possible, but what has been suggested by my sister in law doesn’t seem fair. She is saying that she will be responsible for managing one unit and she will keep any income from that unit. From what I read here 5-10% of the gross rents is the mkt price for a management fee (I live in Orange County, CA). Wouldn’t the N/I be split by both parties? What are things to consider when structuring this deal with a partner?

Also, what are the tax implications that I should consider? Perhaps this would better be answered in the tax section of this forum. Thanks in advance.


I have a sister in law who now seems nicer, more reasonable and fairer, thanks for allowing me to appreciate my sister in law!

First of all I want to thank you for serving our country!

Now as a veteran you can qualify for 100% financing for any property up to $417k and the Veterans Administration guarantees your loan.
Now find a lender who participates in the VA loan program, you may need to get a “Certificate of Eligibility” from the VA, if you are required to do this you will fill out VA Form 26-1880 and submit with proof of service to the US Department of Veteran Affairs.

Now when you buy the property you choose ask the seller to contribute 3% (Example) of purchase price to pay buyers closing cost’s; as this way you have no need for any partner and you will own the property!

I think you already know the answer to your question?

Good luck,


Partnerships,within the family are going to cause problems. If you can do this deal on your own do it.The red flag has already been raised,pay close attention to it.

is she going to keep the loss, too? Is she going to put cash in to cover the losses? I she going to pay all the taxes?

family is family and business is business. decide which one you are in.

Can’t have both.

Trying to have both will lose one or the other. Usually catastrophically.

I speak from experience. My family has been bit on the ass by trying to mix business with family. DO NOT DO IT!

That’s only an opinion, you decide however you want to. :]

I totally agree with the previous posters. DON’T DO IT! Back out now, and later try for a deal just with you only. NO PARTNERS, and especially not family as partners.

It will only make for miserable Thanksgiving Dinners when your relative tells everyone how she got screwed in this bad deal because of you. Even though YOU were doing her a favor. Do arms-lengths transactions only. The only relative you should do deals with is your spouse.


Partnerships in real estate are very difficult and often fail. You are already in disagreement with your partners and the deal isn’t even done yet.

You are the one getting the mortgage, so I simply do not see why you need a partner. Do it by yourself and save a lot of grief.

After saying that, I have to point out that I don’t think your SIL is being unreasonable. You say you are going to be 50/50 partners. Well, you are going to live in half the duplex, so that is half the value of the building that you are taking for yourself. If you are using half and expect your SIL to settle for 10% for the other half of the building, you are also expecting to take 90% of the other half.

Not exactly a 50/50 partnership.