Partner Structuring Dilemma

[Ethan Cole]

Hello BiggerPockets! My wife and I bought our first property at the beginning of the year. It has been a valuable learning experience, and we're making good money on it. We're trying to expand and scale relatively quickly by dealing off market, and using the BRRRR method. This deal was done as a part of a partnership with my wife's aunt and uncle. We're happy in our partnership, and it's lucrative for both sides, but I'm beginning to think we should have structured things differently. We formed an LLC with them, and we are each 25% owners and entitled to a 25% share in distributions. They fit more of a silent investor role, as they live out of the area. We talk to them when there is a decision to be made, or just to touch base. Again, happy to be partnered with them. The arrangement for this first deal was that my wife and I find the deal, make the offer, arrange and manage contractors, find and manage tenants, and manage maintenance. We did quite a bit of work ourselves working on the property to save money, but we didn't save any time. Their role was to front the majority of the cash needed to do the deal, with the agreement that our portion of the profit would go to them until our half was paid for, then we would split profits 50-50. Total cost between down payment and rehab was about $40,000. We only owe about $4,000 on our half. So the dilemma is a 2-part dilemma:

1- Other family members have seen our success and would like to partner with us, but I/we don't want to have to split a relatively small deal 3-5 different ways. We would like to partner with family and friends in a way that benefits us, and all parties involved without anyone feeling like they're being slighted in any way.

2- As we grow this business, I don't feel like this is the best way for us to split a deal. We find the deals, and do the work, and then split the profit evenly. We originally justified it because of the cash advance, but moving forward I don't know if we should structure it that way. I feel like a lot of work is done on our end, and then we still end up paying it back to a 50-50 ratio. It's also worth noting that my wife acts as our realtor, and would get commission for her work as a realtor. She somewhat feels that her commission is our extra payment for all the work, but I see that as her just doing her job for a buyer like she would for any other sale. 

I'd like to know what other people have done in this scenario. How did you partner with friends and family? How did how split the work/profit?

Sorry for the long question, and thank you for your time!