Partnerships: Structure, Disbursments, and everything else I don't know

[Rob Donovan]

SO, here is my impossible to answer question, "How do I structure my potential partnership?"  @Brandon Turner, I know your are a big proponent of partnerships. Can you, or anyone for that matter, give me some insight on how you have worked them in the past or send me in the right direction on where to look? I am sure you have spoken about this more than once. I have been searching the site, but have not found what I am looking for.

Here is what I have been thinking about:

Create LLP or other entity that best suits partnership

Potential partner puts up 20% for down payment on typical bank financed 5 year arm.

Partner and myself will be 50/50 owners in property. I will find the deals, arrange the financing, and do all management. Partner does nothing other than supply funds

No disbursements for initial 5 years

At 5 year mark, refinance property, repay partner the original investment amount.

From the 5 year mark till property is sold, disburse 80% of gross rents minus taxes, insurance, debt service, and other expenses. This leaves 20% in reserve for vacancy and maintenance. Disbursements will be split 50/50

At time of sale, all proceeds will be split 50/50

I am sure there is a lot wrong with this thinking, but that is why I am asking. I imagine that most investors will want to see a return on their money sooner that 5 years, but I would like to do things this way to guarantee the reserve fund and to make sure the investor gets all his cash back within 5 years.

What do you see right or wrong in this scenario? Let the criticism begin. I can take it.