How to Partner With Someone

[Dan Buchta]

Hi, this may seem like a silly question but I was hoping to get more information on the different ways people can partner together to invest in real estate, and what that really means. Here's some back story as to why I'm asking:

I'm looking to buy my first rental property in the next 6-8 months. The reason for this time frame is because I will not have enough money saved up to do a 20% down payment. Now I have read and heard a lot that I don't necessarily need 20% down in order to get started and that I could partner with someone else in order to get the necessary funds to get up and running. I have a few people in mind that I could potentially ask to invest with me but they also have no real estate experience. So before I go to them to discuss it, I'd like to understand what people generally mean by "partnering with someone"?

Do they mean to literally form a legal partnership in the eyes IRS or is it just more of a general term for an agreement between people?

What are the usual terms of the agreement? For example, if I have 75% of the down payment and plan on doing 100% of the work managing the property, what incentive should I offer my partner? I would assume you offer a percentage of the equity, but how much is a fair amount? 

Also, what if I want to put more money into the house to force appreciation a year later? If I partner with someone for $10k but then put $20k into the property a year later, do they reap all the benefits of me doing that as well?

Also in the above scenario, if I offer my partner a portion of the equity but my end goal is to fully own the property at some point, how can this be accomplished? Can they refuse to be bought out? Is there a way to work a timeline into the agreement?

Lastly, how is any of this enforceable? I can understand if it was part of a legal partnership but if it wasn't then I don't quite see how any of it could be.

Thanks!