Hey BiggerPockets community,

I’m in the early stages of building a real estate investment partnership with a silent investor. He’s willing to put up the capital, and in return he’s looking for a 10% preferred return annually on his investment. Beyond that, he’s open to working with me on additional deals if this first one goes well.

Here’s the setup:

• He’s 100% funding the acquisition and rehab.
• I’m the active partner: sourcing the deals, managing any contractors/tenants, overseeing everything.
• His only ask is that he gets at least a 10% return on his money.
• I want to make sure I don’t break his trust—I'm grateful for the opportunity and I take it seriously.
• At the same time, I want to structure it so we both make good money and ideally roll profits into future deals for long-term growth that sets us/our families up for success. 

Where I need advice:

1. What’s the best way to structure this to ensure he gets his 10% preferred return and there’s still meaningful profit left for both of us?
2. Should we include some kind of profit split after the preferred return? If so, what’s a fair range?
3. What do you think the best strategy would be for the 1st deal? (Michigan market; Lansing, Grand Rapids, Detroit, Upper Peninsula, etc) 
4. After the 1st; do you find it best to stick with one approach for a while or diversify right away? 

I’m committed to doing this right—for him, for me, and for the long term. Any experience, sample structures, starting points or warnings you can share would really help.

Thanks in advance!