How to Use a Money Partner Without Being a Co-Borrower

[William Reed]

BP,

I am trying to finance a 4-unit deal using a money partner who will provide the down payment and closing costs for the purchase in return for 50% of the cash flow and 50% of the equity.  I will secure the financing and manage the all of the operations for the property for the other half of the equity & cash flow.  The problem is that I found out, after I  had already filled out the mortgage application (for conventional loan), the bank wants to add my partner as a co-borrower since I don't have the funds, which is going to be a deal-breaker.  My partner already has a large amount of mortgage debt from other investment properties and does not want to incur any more.  He only wants to be a silent partner who infuses the initial purchase capital.

My thoughts were to open a joint account where both of us are required to sign prior to any withdrawals and use that on the new mortgage application. We also want to setup something like a partnership agreement/entity (LP, LLC, or otherwise) so that we can clearly outline the details of how we will operate and conduct business. I know it's difficult to do conventional financing with an LLC, so I was hoping to get the financing in my name and use the LP/LLC to manage the business side of the property.

What is the best course of action to accomplish both?