Structuring a Partnership w/ Buy & Holds
Hi all, here some background to help setup my question. I'm focused on buy and hold at the moment to build cash flow. I work a full time job and manage 6 units myself. Originally my goal was to buy 1 property every 2 years. My new thought is to scale a bit quicker with the help of a partner. I have someone willing to go 50/50 on down-payments with conventional financing, but they want nothing to do with the day to day. Can anyone give advice how to better structure this partnership and point out shortcomings on my below outline?
Here's what I'm thinking..
50/50 split of the down-payment and funding of the initial reserve account for the property. Investor gets 25% share of title & a 7-10% preferred return on their initial investment. I keep 75% equity share & the rest of the cash-flow. I'm targeting properties w/ 20% cash on cash returns, so with the investor taking 10% of his initial investment my cash on cash return would be roughly 30%. I do everything (find deal, negotiate, finance & manage).
I'd pursue a tenant in common deed to make the 25/75 split. I have no idea what's involved on how to properly split the title disproportionately or if the lending company will take exception to it since our down-payments will be equal.
Thanks for any suggestions and help!