Starting a fund

[Gabe Cole]

Hi everyone,

An attorney I know has approached me on starting an investment fund with him to invest in residential properties. He knows I have been rehabbing REOs, trustee sales and short sales with success and wants me to run the acquisitions and manage the rehab and sales of the properties. He has several high net worth clients that he knows would be interested in passively investing in the fund. Since I am also a Realtor I would also be able to list and sell the properties as well.

I wanted to see what some thoughts would be on a fair setup for this type of deal. We will likely offer some sort of preferred return to the investors and then a profit split along the lines of 50/50 on the net profits, but I would like your thoughts on what is fair between me and the attorney that would be setting this up. I am assuming we would both be managing members, would we split our side of the profits 50/50? Once it is initially setup he won't have much to do as far as day to day operations go as I will be the one doing all acquisitions and management of the deals.

Any feedback is appreciated.

Thanks.