Structuring a Partnership

[Mark Wurtemberg]

I am thinking about going in on a deal that I found with a partner. Of course we would do a PA and cross "Ts" and dot "Is". Here are the terms:

• I put 10% cash down 
• Partner puts 10% down
• Partner obtains loan for balance 80% (because my credit stinks, darn student loans)

• Partner states that under this circumstance he would own 90% and myself 10% as he would have the note 80% plus 10% down. Should he die he doesn't want to leave that burden on his wife. Or if I skipped town that he would be left with the loan of the 80% burden. 

I kinda get his point, however, I feel this is no good for me. Very bad ROI. Even if we made $1000 net per month, that is only $100 to me. In this deal we are coming in with $32,000 each. My return of $1200 a year on $32,000 is below 4%.

I have heard many podcasts with @Brandon Turner & @David Greene. And in these podcasts I have heard more often than not if partner one comes in with the deal and partner two has the money (loan or not) that they split the deal 50/50. Am I wrong? 

My question is: How do I effectively go back to my partner and explain that this is not good for me, explain I need this to be 50/50 as we are coming in with the same amount of cash, and that there are ways to make sure his loan is covered should he or I exit from the deal prematurely?

Thank you. -Mark