First Silent partnership

[Steven Gray]

A friend reached out to me out of the blue asking if he could be a silent partner with me on a STR in Panama City Beach, FL. That is what I wanted to do next anyways but I've never partnered with anyone. I own 2 long term rental properties and my primary residence. I am very hesitant to move forward because I've always planned on going in my own being slow and steady but I know part of a deal is better than 100% of no deal. I plan on meeting with an attorney to go over a partnership agreement with him but what are some questions I should be asking myself before I go forward with this? What is a reasonable percentage to offer? Would he have to invest it in my LLC or would we approach a lender together? If a deal goes underwater what is our exit strategy?

Any help will be greatly appreciated.

Steve Gray

[Joe Villeneuve]

Write down on a sheet of paper all, and mean ALL, of the activities, roles and responsibilities of the partners after the partnership is formed and, (this is very important) all the ones that lead up to this deal (i.e...finding a property, etc...).  Apply a number between 1 - 10 to each.  There can be more than one with the same number.  These numbers represent the value of each of these things to the overall partnership.

Now, assign each of them to one of the partners (no splitting).  Add up the total of all the numbers (you'll probably be over 100).  Divide 100 by that number.  Take that percentage an multiply it by the sum of all of the assigned roles for each partner.  That's the percentage each partner gets...and there should be no arguments.

Ever since I started doing it this way, I've NEVER had a problem, an argument, or an adjustment,...and the partnership has always gone smoothly.