My brother and I want to start a real estate business. He wants to be a silent partner while I do all the Managment aspects of it.
What would be a good way to split the business? We wanted to split the profits 50/50 and divide up the closing costs separately, but aren’t sure what a good split would be??
Also what steps do we need to take before we purchase our first house? Do we need to create a partnership or form a LLC??
I would suggest not doing it. Blood and money/business don't mix well. Just my 2 cents.
Second that. If you both aren’t providing something if equal value then it becomes a unbalanced issue.
If he provides all the capital then he is a Limited partner. But no matter what I don’t do business with anyone I have to see at thanksgiving dinner. It has served me well. I actually learned that from an uncle that was in real estate and everything ease you could imagine and NEVER did business with a relative. Always keep them separate.
If you want to do it, sit down and discuss it with him and put it in writing. If you are going to manage the property, do you get paid for your time? Depending on the unit and the tenant, it can take a little or a lot of time. Depositing the rent every month isn't a big deal, but cleaning the unit when you have a turnover can take a bit of time.