JV Split - 400k - 20/40/40 (3rd property)

[Patrick Michael S.]

Hi BP Network,

This will be my first post but I'd like to jump right into it. I look forward to engaging with some of you on these discussion boards. Please see questions below. 

I am looking to invest into a 3rd income property in the Ontario area. The first two properties I invested into were new builds and I would like to stick with this strategy. If you're familiar with the GTA market, then you may already have an idea.. I am heavily leveraged on the first two. I may get approval at the bank for one more but after that I'll most likely be tapped. 

With the next investment, I'd like to arrange a JV with two other partners. I would do all the day-to-day and act as "GP", not sure if the term is the same in RE, and the two other partners would solely provide the cap. I have been running the numbers and studying the books, but here is my dilemma. I have seen some recommend splitting the income/expenses/profits as per the terms of the JVA. I have also seen others recommend a flat % fee, paid out as a quarterly or semi-annual dividend. 

I'm looking for some expertise from those who have used a flat % in the past/currently. At the time of exit would the other partners participate in the profit of the sale or simply the yearly 'dividend'? At 6% that would basically eat up the monthly income and my portion of the pie would be 20% on the profit, is this common? 

Utah