Structuring a 3 way partnership

[Eric A.]

Hi all! 

 
I would love to hear your thoughts about structuring a buy and hold mid term rental deal that I am trying to complete using a 3 way partnership.   

My first partner (my parents) would be contributing most of the money, which would be 58% of the total cash required to close and get the property ready to rent.  On the other hand, my second partner would be contributing 21% of the total cash required and I will be contributing the last 21% of the cash required.  

With that in mind, what would be the best way to structure this deal?  The second partner and myself have and will continue to do all of the leg work, while the first partner is essentially a passive investor.  I was thinking that we would split our NET Income according to our contributions (my parents would get 58% and the second partner and I would get 21%). We would do the same as far as splitting up the equity in the home.  Over time, say 10 years, we would then slowly buy out my parents' share so we would all have an equal 33% in the deal. 

This leads me to my next dilemma. We would be forming an LLC for this deal, but from what I understand, the terms on the mortgage would be much better if the loan was conforming and was taken out by my parents under their name. However, they would be carrying a higher risk than myself and the second partner so should they be entitled to a higher percentage of the NET income? Can anyone expound upon the advantages of having the mortgage under the LLC vs. under just one partner's name? Is this arrangement a fair setup or am I missing something here?

Thanks in advance!