Partnership Split 60-40 and Question on Initial Investment

[Nicholas Nguyen]

Hello,

I'm working on an operating agreement for my partnership LLC. So I have a passive partner who paid for the initial investment (downpayment and closing costs) of the property. I didn't pay for anything since I found the deal and will manage the property. The mortgage is under both of our names

We agreed that I'm getting 40% and my investor partner gets 60% on everything (cash on cash return and equity).

We are not sure about how to handle the initial investment that my partner paid if we have to sell the property say in 5, 10, 15, or 30 years?

Any suggestions on how to structure this partnership?

Thank you

[Nathan Gesner]

60/40 split on everything. If it cashflows $200, he takes $120 and you take $80. If you sell it in ten years and make $100,000 profit, he takes $60,000 and you take $40,000.

What if it needs a new roof or furnace? Are you splitting the costs 60/40 just like the profit?

What if you keep it for 10 years? Your partner's initial investment won't change, but the number of hours you put in will definitely change the longer you hold it.