Partnership/Syndication type Deal?

[Steve Farley]

Hi everyone, I'm new to BiggerPockets, been listening to the podcast for a while and looking to buy my first rental unit. I've been presented the opportunity to partner with a friend of mine and he'd be the financial backer with me doing the leg work.

A little background on my relationship with the backer, I actually first met him when i was a child as he and my parents used to work together, fast forward to after I graduated college; I was a Wealth Management Advisor with him becoming my first client with a multi-million dollar net worth, I left my job to go work for him at his company and I'm currently in the process of buying him out for $1million despite the business being valued for a fair bit more than that (giving me a friends & family discount). Obviously with the buyout still going on, I can't do anything that would affect my credit, hence the need for a partner. I'm in my mid 20's and he's in his early 70's

We are trying to figure out a way to work the deal to be beneficial to both of us, since he's looking for short term return, where I'm looking for long term value. The idea he pitched to me is as follows:

1. 80/20 equity split with him paying for everything (he's got the liquidity to make this a cash deal) total purchase price should be around $80,000 after it's all said and done.

2. Years 1 & 2 he gets all net income the rental generates less an amount that covers the tax I incur due to the rental profit. 

3. At the end of year 2 I get to buy him out for $90,000 or, I can buy 30% from him for 27,000 to make it a 50-50 partnership and then any buyout for his remaining 50% would be at fair market value.

Some important information: House should rent for $800 with one of our employees occupying it, so an excellent tenant to have. Roof is in good shape. All repairs & maintenance will be done by the two of us as our background is in general contracting.

What are your thoughts on this deal? In my opinion I think this partnership favors him too much, I think with him getting the profits for year 1 & 2 the final buyout price shouldn't be any more than the cash he has in the deal. How would you structure a partnership like this?

Thank you for your time and input.