Structure profit split with partner on rental property
I hope this is the right forum. I've seen several threads on structuring a partnership but I can't find anything that addresses the profit split.
The situation is this: I own profitable rental property (thanks to the fantastic advice gathered here) that I manage myself. I do not have the cash to buy more, but now have an investor that can pay all cash for the purchase and rehab of some more properties. He wants to be a 50/50 partner with me and we will set up an LLC for the legal side of it. He will be involved in big picture type decisions mostly (he's not afraid to get in and rehab but has less available time than I do) but I will be the one doing the majority of rehab, managing contractors, finding tenants, managing the books, etc. etc.
We have discussed how to split up the profits but decided to take a break and think on it some more. We are both very fair people and we just want to make sure it is set-up so that the other never feels like they got the short end of the stick. My initial thought was he "loans" the money to the LLC and the loan is paid back from the rent revenue. Then I receive some payment 6-10% of rents (professional property mgmt fees in area are 10% of gross). After any other expenses, profit is split 50/50.
We also discussed doing a refi after 18-24 months so that he gets his cash back out. However, he is hesitant to that and I understand why - I should have some equity by that point.
Please give any advice and/or experience in how you have handled situations like this in the past.