How to Calculate Equity for Finding the Deal

[Steve Endress]

Here's my situation:

I have been working with a commercial broker for the last two years to find a good MFP, found it, got my offer accepted at 1,365,000.

I have a good relationship with a bank, have the lending commitment, have a good relationship with PM, have their commitment to manage the property.

Downpayment will be 275,000 and I had initially planned on doing this myself, but now thinking about partnering with one other person. This other person has no real estate experience, would lean on me heavily for the know-how. You may ask, why not do private lending--I would rather spread the risk of the deal with another person and not have to pay interest in a borrowed downpayment.

What % equity should I keep for arranging the deal? I read on BP that I should keep 20%. Do you agree, disagree, why? Does 'arranging the deal equity' include me doing most of the due diligence before the purchase, or would you expect more equity for doing the due diligence.

If we arrange a 50/50 partnership, how is the actual capital contributions calculated, given that I will be receiving equity for finding the deal?

After we close, it is still expected that I will do most of the manage-the-manager, strategic decisions, and maybe even preparing the tax returns. I was thinking that we both would keep a log of the work and time we do for the partnership and settle up once a year, or something like that. What do you suggest?