Accelerating Growth thru Partnerships: Structure Feedback

[Alex Huang]

I'm curious to hear people's thoughts on an arrangement for some potential partnerships.

I have a number of personal friends who are independently wealthy and who have expressed interest in working together. They are looking for opportunities to generate cashflow post-retirement, etc. I've been thinking of creative ways to partner up as I think it's a great way to accelerate growth in my RE portfolio. I wanted some feedback on this structure:

1. Friend puts up all the capital to purchase a house (SFR or MFR)

2. I do the rest: find the properties, rehab, rent them out, etc

3. We BRRRR the properties (or hold them free & clear, depending on investor's preference), return the invested capital and split any excess in the refi 50/50. Profits moving forward are split 50/50 in perpetuity.

4. We would create separate LLCs with each person and hold the properties in the name of the LLC. Operating Agmts etc would also be fleshed out to ensure everyone is secured.

I know terms are all negotiable, but I'm looking for feedback on the 50/50 split and whether that seems reasonable / consistent with other deals you all have done?