Need how-to info on using a Credit Partner

I’d like to get information on how to set-up a ‘credit partner’ arrangement.

I have a couple of folks who are interested in being my credit partner on individual fix & flip projects.

I am trying to learn how to structure these arrangements. What’s typical or suggested by way of profit distribution. What’s the best entity for this type arrangement. What advice would you give in managing this arrangement. Is there a book or other materials discussing the subject?

In essence I want to find out all I can about credit partnering. Your help and input will be greatly appreciated. I am operating in Colorado.

Thanks. ~Kirk

You can have your credit partner get the loan in their name, but have you both on title. You can work out your own profit arrangement. Is this what you are asking?

I would recommend starting a LLC with your credit partners and QCD the properties to it after bought. The property wil be bought in there name but both names on the title and of course the note at closing. You will have to identify at the purchase to title company each persons position for taxes as well when the property is sold.

Just create an aggreement or get a local attorney to create one, probably cost less than $250. it should state what each persons responsiblilties will be both financially and physically, it managemet or rehabbing is needed. How much each partner gets if property is sold or is rented for cashflow.

As for how much to give the credit partner thats up to how good you negiotate. I am a credit partner with one local guy who has a niche for finding rehabs that can be rehabbed and sold within 3months (i am in a soft market now and 3months is great). We do a 50/50split and i am totally hands off. He finds property, presents it to me, with comps, rehab cost, holding cost, etc.If i like it i close on it. He then has a partner who does the rehab, he doesnt even do it. He is a whiz at finding and reselling though and designing rehabs. Generally I clear 40-75K per deal…so not bad … and i alway zero out of pocket expense for me. I just put up the escrow downpayment of $500-5000 per property depending on seller and get is back on the closing day. he handles insurance and payments…
So lets see, 2 to 3 hrs of work in 3months and 40K+ in my pocket…not to bad…3 or 4 of these a yr…you do the math…

Thanks Yrush and ShaunG. That was truly helpful information.

Yrush, you wrote, “The property wil be bought in there name but both names on the title and of course the note at closing.” I was thinking to have the credit partner purchase the property outright and QC it to the LLC while continuing alone on the note. My issue is that I am presently holding a number of properties in my name which are causing a drag on my credit score. I want to do a bunch of moderate rehab fix & flip projects hence the need for credit partners to acquire the properties. I would prefer not to go on the notes. I’d like your thinking on this.

A question for both Yrush and ShaunG: I am considering a 40/60 split with the larger going to the partner who does the ‘financial lifting’. i.e., supply the project’s capital. Does this sound reasonable?

Thanks again guys!


So your planning on taking thr 40% i gather. I would offer it at 50/50 first. Also are you doing the work yourself? Where do you plan on getting the funds for rehab??

Are there any loan programs that will fund the purchase AND rehab costs?

Im in the same situation. I have a partner who is willing to use their credit to purchase rehabs. Iv’e been told that there are zero down programs available bescause of her 720 FICO, but now im trying to figure out how to come up with rehab funds.

What do you suggest?

You can use a HML which will cost you money in the front and back end. Usually about 3-5points upfront and 12-18% interest rate. They will escrow the funds for rehabs but you will need money to pay the mortgage while rehabbing. You will set up a plan for your rehab and as you finsih 1 project they will check it out and release more funds usually within 24hrs.
Now they also have conventional rehab loans. Works same way with escrowing rehab funds but much cheaper to deal with and slighter higher LTV at times.