Partner Financed our multi when can I take cashflow?

[Brian Destefano]

This is something that should have been discussed initially between us but I'm curious how some other partnerships are structured.   Our agreement is that he is the preferred equity partner and I am the sweat equity partner.  We split all profits 50/50.  We have a 10 unit building that I found and got a great deal on. I hired the management company and kinda run the books to make sure everything is taken care of.   He paid cash for the deal and it generates about $14,000 a month.    Basically how we originally had it planned out was if we go to sell the property, he gets paid back his original investment and then all the profits are split 50/50.   But what happens with all this cashflow in the meantime?  Is it ridiculous to think we could just split this 50/50 in the interim?  How have others structured such deals?   Again definitely should have been discussed earlier specifically but deal happened fast.  

[Melanie P.]

I suggest having a conversation with your partner about how he would like to handle it and going into that conversation with zero expectations. Finding a property and hiring a property manager is not exactly profuse sweating. I suggest you keep the guy who put $1.8 million into your idea happy and comfortable. You'll probably want to have some level of reserves so that you don't wind up in a crunch for a major expense where more money needs to be added and you don't have it to add..