How would you set up this partnership?

[Brenda Reems]

I am under contract on my first 4 plex. I am set to close on August 1. I have a long term significant other that I would really like to be involved with the business. I want him to have some financial gain as he has a lot of skills that will help with my success. This is what we both will bring to the table. 

Me: I found the property, I am funding the loan and most likely any initial set up costs. The building is fairly turnkey but will need some minor upgrades. I am furnishing 1 unit to begin with. I will also be doing the majority of the managing.

Him: He is much more organized than I am. He is great with computers and spreadsheets. Very handy when it comes to fixing things. I think he will really be essential to making sure the business side is operating smoothly and that this will ultimately be a success. 

I originally planned on doing this "on my own". However, I do know that my biggest chance for success will be if he is involved. He is a "higher" earner. So, I don't want to just higher him. Ideally, I would like him to also get tax benefits. I was just going to start an LLC with my name only. Do I put him on the title with smaller shares? Do I add him as a partner on the LLC? I have tried researching this but I am falling short on finding answers.

[Michael Fraulo]

Some options:

Add him as a partner in the LLC - instead of holding the LLC 100% yourself, you could form it with him as a co-member. You can split ownership however you want (doesn’t have to be 50/50). Maybe something like 70/30 or 80/20 depending on how much capital/work each of you brings. This way, he shares in profits, losses, and tax benefits.

You don't have to put him on the mortgage or title. As long as the LLC owns the property and he's a member, he'll get K-1 income and tax benefits from his share. This also keeps things cleaner with your lender.

Have a written operating agreement - regardless of how you split things, get something in writing. It helps avoid misunderstandings down the road and clarifies roles, responsibilities, and exit plans, especially since you're mixing business and personal.

Since this is a long-term relationship and you’re talking ownership, I'd recommend sitting down with a real estate attorney or CPA who works with partnerships. They can help you set this up right from day one.