Sweat equity in a partnership agreement

[Hillary Windrem]

Hello everyone, this is a two-part question. 

Our family is discussing pooling our resources to invest in real estate. My husband and I already have experience with rental property. My mom has a good bit of cash from a divorce. The idea is for her to buy a property cash. My husband and I would pay for improvements, supervise the work, and manage the rental. Once rented, the rent would go to us, and all equity/future profit from sale would be hers. We would formalize this with the help of a real estate attorney to keep things tidy. My first question is: does this sound like a fair agreement?

The second part of my question pertains to my brother who does not have liquid assets but is able to invest sweat equity. He paints and is handy in a lot of other ways (though is not a licensed contractor). We want a way for him to participate in deals like this if he is interested, but don't really know how to bring him onboard without being able to easily calculate % ownership based on $ paid in. I hope this makes sense. Has anyone ever let someone earn a stake in a property via labor? If so, how did you structure it? Is there any way to do it without someone feeling like they got stiffed? Is this a stupid idea? (We would have him sign workman's comp waivers and formalize everything with a contract)

TIA