Partnership split advice needed

[Lauren Cook]

For the past few years I've house hacked and have a background in real estate sales, lending, and property management. I'm not an expert, however I'm certainly not new to investing. A close friend of mine approached me wanting to get into real estate investing a few months back in the Phoenix area. He lives in California and has an extremely demanding job and family. We decided to start an LLC and discussed how we would invest and what responsibility each person would have down to extremely finite details and agreed on everything.

Essentially, he is the credit and money or passive investor. I'm more of the active partner, getting the the LLC set up and the boots on the ground person as I'm in Phoenix and he's in California. I will be finding the property, getting it rent ready, screening tenants, leases, dealing with tenant correspondence, repairs, and coordinating everything needed to be successful. I will do everything even open bank accounts for the LLC(s), pay bills, mortgage, etc. He just wants to collect the check every month essentially.

Initially, we discussed a 80/20% split of the equity and a small management fee per property. I.E. he puts in 100k, once we sell he gets the 100k back, all profit after that is split 80/20. If I put any money towards properties in the future, the split would change. Ultimately, his plan is to purchase 2-3 single family homes per year.

However, I have found a perfect property and it needs a little bit of work in order to get it rent ready. I am now going to act as more of a "project manager" with him purchasing all materials but I will fix up the property and landscaping myself. Anything that  I cannot do myself, he will pay a contractor to complete and I will coordinate.

How do others do this? Charge the LLC an hourly rate, and take that out of the operating account? Roll that amount as a percent of equity?

Is an 80/20% split enough for this?

This is the only person that I would invest with outside of family, I have helped with getting his credit up, eliminating debt and getting him in a better financial position in order to get going on investing and I want to make sure that we are set up for success.

Any advice is much appreciated!