Partnering On a First Deal with a Friend

[Connor Ong]

Hi BP! I'm a newbie to the RE world, but have been listening to Real Estate Rookie and the BP Real Estate Podcasts religiously over the past 4 months. My best friend from grad school has been listening to both podcasts as well, and brought up the idea of partnering on a house-hack that I would live in (as him and his GF bought a townhome earlier this year). We are both located in the Phoenix area. Right now we're starting to build our "team," as he has a RE lawyer, I have a banker, and we both know multiple RE agents who do RE Investments.

Our goals:

We both agree on looking for a turn-key 3bed/2bath (minimum) single family home or townhome/condo at least 1500sqft. Gameplan would be to do a conventional loan with 5% down (2.5% each) for the house. Our target price for a house is We both want to build up equity, but I've been more keen about getting some cashflow that I can put towards my student loans. Long term plan would be to continue to rent the house, and eventually take out a HELOC to get another property either individually or together again depending on how this first one goes.

We've been spit-balling ideas and just getting the ball rolling, but we're not too sure on how to work out the logistics of the partnership. Some ideas we've had include: A) Splitting the equity and cashflow evenly; B) He gets more equity, and I take the cashflow.

Do you all have experience in doing deals with friends? How have they gone?
What other types of ways would you split our partnership?
Any other suggestions or tips would be greatly appreciated! Thanks in advance!