Structuring a partnership deal

[Jonathan Ruths]

Hi all,

Just curious on how you'd structure a deal with a partner with the following information. I'm going to bring about 30k to put towards downpayment and closing costs of the purchase and the property will be in my name as a second home.  My partner will bring about 50k for rehab and furnishing.

Here's what I'm thinking. Since I'm managing the property, I'll take 15% off the top of all bookings similar to a management company.  Then my partner and I will split the remaining profits based on the percentage of the money we brought.

Does that sound like a good deal for everyone?  Thanks for your feedback!

[Nathan Gesner]

Quote from @Jonathan Ruths:

It sounds OK on the surface. My preference would be to split all profit based on the percentage of money invested, but then pay each partner separately for work done. You get a management fee. If he does repairs, he gets paid hourly for his labor. I think it's cleaner that way.

Don't forget to negotiate an exit strategy in case one or both partners want to leave.