Partnership Structure questions

[Brandon Callahan]

I had someone that I trust and respect approach me about becoming a partner in some real estate deals, but I have some questions about what would be a fair in terms of ownership given this potential partner's proposed partnership/ownership structure. The proposed structure would be as follows:

-We would create an LLC to hold the property, with both myself and potential partner as members .

-LLC would get a line of credit for purchasing and rehab. Potential partner would sign a personal guaranty securing the line of credit for the LLC.

-I would do most (if not all) of the rehabing and landlording.

Now the Question: Because the potential partner is only providing access to capital (not the capital itself) by acting as the guarantor and not doing any of the other work, what would be a fair equity percentage for the potential partner in the LLC?

[Stanley Yeldell]

Great question—this setup comes down to how you value the credit risk vs. the active labor.

Since your partner is only providing a personal guaranty (not cash), and you're handling the rehab + management, a 10–20% equity share for them is common and fair in similar deals.

You could also structure it so they receive a guarantor fee or a smaller equity kicker instead of permanent ownership if you'd prefer more control long-term.

Whatever you decide, just make sure the roles, responsibilities, and exit strategy are clearly spelled out in the operating agreement. That clarity is key.