Partnership Questions for first time partnership

[David Maldonado]

Hello,

I am working on a partnership with 2 other partners. I will be doing all the legwork and my partners are responsible for the funding.

This is how the profits will be split: Myself 50% Partner 1: 25% partner 2: 25%

I believe I am justified for the 50% because I came in with the plan, did all the work (I have a construction background), and will manage the property. The other half of the equation (the financing) was split between two individuals.

Does this seam fair? I want to make sure I am being fair before I present these terms to my partners.

[Benjamin Aaker]

It depends on your partners and the upside. They are going to be the silent investors but in a partnership they are going to be taking on both financial and civil liability. Managing the deal is a lot of work, but you aren't risking any of your money. You could simply walk away, but they can't. In a partnership, all partners are responsible for the business. If there is a civil liability case that doesn't go your way, all three of you will be responsible. Those liabilities are a lot to take on for putting in 50% of the equity but only getting 1/4 of the profit. As far as upside, if the numbers are very promising, that might entice an investor to get involved on these terms.