How Do I Pay Out A Private Investor?

[Steven Barr]

I am looking to bring on a private investor for an apartment deal. However, I need to understand how to pay them out before I do so.

Example.... I put my own money down, and then use their money as well to buy a bigger apartment. We buy the apartment for $2mm, raise rents, and then make $500k on the appreciation.

We agree they get a % of the gain. I would like to 1031 my profits into the next deal. If they want to cash out,  can I just cut them a check and 1031 my portion? If so, are they then responsible for paying their own taxes after check is cut, or am I somehow involved in the tax payment process?