Buy/hold partnership structuring
I've put together a partnership agreement and presented it to my potential partner. It's structured so I am the managing partner, and they're the financial partner. They are responsible for the downpayment, closing costs, and initial repairs. I just presented it to them, but they've come back with an interesting question.
How is it a win situation for my financial partner if they don't see a true profit for ~10 years? Let's say they invest $30k for the house, and we split the cash flow. If they're only getting $3k/year, it's going to take 10 years before they see a profit.
I proposed letting them get the full cash flow until their original investment is paid off, we'll split the cash flow, but then I'm getting nothing ( not counting appreciation and equity) for 5 years.
Am I missing something?