Equity Participant Vs. Shareholder

[Israel Kirk]

Hello,

 I'm fairly new into the world of real estate. I'm not an agent and I'm fairly green to the whole overall process especially the investing side.

However, i happened to develop a relationship with an owner of multiple lots in a very attractive real estate market, and he's agreed to sell them to me.

The plan is to purchase the lots for a total of $475,000 and put 1.5 Million into developing the residential units that will sit on the lots.

I've found an investor and he's offered to do 100% of the financing, with a 5% return on his money invested,but he's also allowing some lee-way in regards to the profit sharing.

We've agreed to 75/25 split after expenses are paid, of all cash generated from rents of the investment properties and from the profits of the eventual sale of the homes.

I can either participate as an equity participant or be a 25% shareholder in an LLC we would establish. I'm vaguely familiar with some of the pros and cons of both of these scenarios, specifically the tax implications, so I wanted to see how it would be suggested I move about structuring the deal in a way that is mutually beneficial to us both in the long run and maybe suggest something I should be privy to that i'm otherwise unaware of.

I look forward to seeing your advice and input.