Suggestions on How to Structure a Deal (buy and hold with rehab)

[Jonathan S.]

I recently purchased a 2 family in a highly competitive area in NJ which i'm house hacking. I've been speaking with my neighbor who has lived there for years and slowly planting the seed to buy his property. His property is also a 2 family however it is not in as good of shape and he doesn't rent it out. He is considering the idea but floated this proposal to me last night.

He is looking for someone/ contractor to front the costs to rehab the property then move forward essentially as partners where the individual would retain 70% of the gross rental and the owner would take the other 30%. Owner would maintain and pay the existing mortgage/ taxes etc. Ideally he wants to keep the property to maintain his retirement nest egg since he understands the actual value fixed up and appreciation potential moving forward. His idea is also that he loves the town and knows if he sells he'll probably never be able to come back in.

Interested to hear some ideas on how to structure the deal to be beneficial for both sides or maybe counter in a different fashion.