Taking On A Family Investor

[Justin Strackany]

Hello there! I'm hoping some of the learned folks on this forum might be able to help me. 

I have been investing more heavily in real estate this year, and, thus far, have leveraged only traditional 30-year FHA loans. However, my brother and I have discussed embarking on something a little different:

• He would give me some money (let's say $100,000), that would be used for the down payment on a real estate property. Alternatively, I might spend that money myself, and he would pay me back after closing.
• I would use that money to purchase an investment property, and, upon closing, I would pay him back in monthly installments enough to generate 10% annual return on his investment (i.e. 833.33 / month). I would be able to keep anything that was left after the monthly installment and mortgage payments. If there wasn't anything left, I would pay him back out of my end. In other words, I would be taking on the risk in exchange for him funding the transaction.
• After his principal was refunded (likely 10 years), we would then split any profits evenly.
• If we sold the property prior to that, we would split any remaining proceeds after his principal + 10% had been repaid.
• Obviously, we would put some sort of legal document together certifying all of this

My question is whether my brother can legally give me money to purchase a house that he will be a co-owner of with a financial interest, from a tax standpoint. Obviously, this wouldn't be considered a gift, since he is expecting to be repaid, so how do we properly account for the exchange of monies? Do we need to form an LLC or is there a way we can do this more simplistically, and I can just purchase the house as an individual with his funds? In theory, we could do this "under the table", where he just gives me a check before or after and then I purchase the money, but likely I would need to prove the origin of the funds during underwriting, so I'd like to be above board. I imagine you run into this with parents purchasing for their children, but my situation would be a little different, as I wouldn't be listing him as a co-signer.

Also, anything else I'm not considering with a partnership like this? It seems like a win-win. He gets a better return on his money, and I get partial ownership of a long-term investment vehicle. 

Thanks in advance!