Weighing two JV structures on a 12 unit tied up under contract with a distressed seller

Price the two offers on the same deal instead of on each partner's own forecast, because the forecast is doing all the work in your comparison. At 690, partner A at 50 percent gets you 25k. Partner B at 25 percent gets you 37,500. At 720, A gets you 40k, B gets you 60k. B pays you more at every price. The only way A wins is if A's buyers are real and B's are not, meaning A actually produces a closing at a number B cannot reach. So the question narrows to whether A's commercial buyer list exists. Test it. Ask A for two buyers who closed a sub 20 unit in your metro in the last twelve months and what they paid. Names are optional, the deals are the point. Anyone with a genuine list can answer that in one text. Ask B the same. The other thing in A's offer that should bother you more than the split is the assignment of contract to his entity. You would be handing over the only thing you own on day 6 with a seller you sourced and a 5k EMD you posted. If A wants the contract, then A should also be posting the earnest money and taking the risk on the extension. The piece that deserves the most nerves is the three gutted units. Down to studs after a pipe failure two years ago in a building from the eighties usually means a buyer prices in a mechanical and electrical scope they cannot see, and that is exactly where a 720 offer becomes a 665 renegotiation on day 22. Whoever you partner with, get a contractor through those three units in the first week so you are arguing from a number instead of a guess.

180 under market across nine units is 19,440 a year of upside. At a 7 cap that's 277k of value that isn't in the 640 price. If that's real, this trades. If those are long tenancies with people who won't renew at market, it's a lot less real.

Arbor, careful with that. Rolling nine below market tenants to market takes turnover, vacancy, and money, and any buyer discounts it heavily. I've seen people underwrite the full delta into the offer price and then wonder why nobody bites.

Partner B taking 25 percent and leaving your contract untouched is a better deal for you and a worse deal for him, which raises the question of why he is offering it. The most likely answer is that he wants first look at the building himself. That is not disqualifying. Just be clear with him in writing that if he ends up buying it, he is the buyer, and a buyer does not also take a consulting cut of his own purchase price.

Thatch is on it. Ask him directly. Nine occupied units on a paper ledger also means nobody knows the state of the security deposits, which is a state law question and a real one at closing, so get an attorney or the title company on that early rather than at day 28.

The 45 day extension you have to invoke by day 25 is the binding constraint here. A buyer on a 12 unit needs financing, and even a bridge lender will want an appraisal or at least a broker opinion, plus a walk of the three gutted units. Twenty days from a signed buyer contract to funding is tight and thirty is normal. That timeline argues for whichever partner can put a cash buyer in front of you in week one, and neither of them has done that yet.

Go back to the seller before you pick a partner. If spring is what he cares about, he may extend to 60 days for free right now, and that single conversation is worth more than the difference between 25 and 50 percent. You lose almost nothing by asking on day 6, and asking on day 24 costs you the negotiation.