How to structure deal with only 1 partner on loan?

[Aria Pearl]

Hello everyone!

I am trying to come up with the best way to split profits for a 3 person partnership.

We are looking to purchase a property for short term rentals. We are all planning to split the down payment evenly between the 3 of us, but only 1 person is qualified and will be on the actual loan.

If we are all on the loan and taking on the same amount of liability, than a 33/33/33 split sounds fair.

But if only 1 person is on the loan, what would be a fair profit split (with all other factors being equal)?

Thank you in advance for your input!

[Andrew Postell]

@Aria Pearl I might guide you to be very careful here - if you are putting a loan in someone's PERSONAL name....well, I would just say to try to structure it differently.  Meaning, a commercial or "portfolio" loan doesn't go in anyone's name.  it's in the partnership name.  That's important because if that loan is in someone's name...they are liable for 100% of the payment.  But if they are only receiving 33% of the profits then they will be showing a big loss on that property.  That might affect how they qualify for other loans.  Usually loans that are not in your personal name are best for partnerships of this nature.  Hope all of this makes sense.