Fair profit split between partners

[Michael G.]

Hi all

After a pretty successful growth period, my business partner and I have have been approached by a number of people who are interested in partnering on some larger projects.

We are looking at a 6 unit building now and my question is, what is a fair split between 3 partners on a project?

1 partner would be silent and would provide funding for closing etc. The other 2 partners would be actively managing all aspects of the property (maintenance, tenant issues, etc).

What's the typical / fair profit split in this situation for all parties?

Thanks in advance

[J Scott]

Originally posted by Michael G.:

2 people would be doing the lion's share of the work (and no matter what anyone says there is work involved with rentals, bookkeeping, tenant turnover, rental deposits, unit maintenance, etc). Seems like a lot of work to give up 50% of the profits for a partner that is only providing $40k or so up front.

Don't think of him as providing only $40K...think of him as taking 100% of the risk...

If the deal goes south, you walk away and lose only your time. He loses his money.