Partnership Vs Joint Venture Vs LLC

[Isaac Lane]

I currently have 4 doors and working on scaling my portfolio. I'm noticing that it's taking me longer than I would like to save up capital for my next down payment and decided that partnering on deals would help me scale faster. I have a few friends and family members that are interested in partnering on a deal. They want to invest money into the deal but aren't interested in the management or day to day operations of the property. I did some research on ways to legally structure a partnership and found that it can be set up as a partnership, joint venture, or LLC. I want to see if someone could explain the difference between the three and in which situations they work best?

Also what's a typical or reasonable equity/profit split in a partnership where one person provides the capital for the down payment and the other manages the day to day operations of the property? Thank you!

[Jerel Ehlert]

See "Real Estate Securities" by Levine and Feigin for the issue "when is it a security under SEC?"

I don't practice Illinois law, but in Texas, a GP/LP, JV, and LLC can ALL be a security or not. There are lots of ways to split this particular hair. Some are compliant with SEC regs and some avoid. Some are not compliant.

Talk to a lawyer in your jurisdiction. 

There's no "typical" split.  Talk to syndicators in your area and your potential investors.  See what they are trying to accomplish.