Question About Structuring a Partnership for Buy/Hold Assets!

[Jeff Petsche]

Hello BP Community.

My group and I are starting out with buy/hold investing and as the person who is going to be 100% involved in the acquiring and managing of the asset, I'd like some feedback on how you would structure the partnership.

Our Situation:

Two of the investment partners are going to be 100% passive and providing capital, so although they really fall under more of a "private money" investor in my opinion, we are all friends who are looking to grow wealth and passive income through rental properties. Both of these partners have full-time corporate jobs and will not have the time or ability to really get involved in the managing of assets we acquire, and have not intentions on quitting their jobs/careers until retirement in about 12-13 years.

I on the other hand am already semi-retired with a police retirement and am a full-time real estate Broker in CA who runs a retail transaction business. Because of my time being more flexible than the other partners, I'll be designated as the Asset Manager in the group. I'll be responsible for the research, analyzing the deals, building relationships with others involved in the acquisition, managing the PM companies, traveling to OOS markets if/when necessary and pretty much everything related to managing and stabilizing our assets.

With that said, I'm looking for some examples of how to best structure our partnership from a % of ownership, % of capital cash, etc.

The initial idea was to have an equal % of ownership with an equal % of capital brought to the table. However, I would receive a one-time 3% acquisition fee (3% of sales price) on every purchase we make (paid for by the other two partners) and add in an 8% Asset Management fee paid to me each quarter. (8% of the total GSI).

Would love to hear thoughts and/or other ideas that you have seen or you are personally doing.

Thank you.