Seeking Advice on Partnership Structuring

[Christopher Erwin]

My friend's brother just bought a 2nd home, and my friend is looking to convince his brother to keep his 1st home and make it a rental property. 

My friend would like to "invest" in the 1st property by writing his brother a check and helping manage the rental conversion. My thoughts are to keep it super simple and structure as a hybrid debt/equity investment.

BP community, what are your thoughts? How would you do it different?!

My Proposed Deal Structure

• Original property owner keeps name on title and mortgage
• Friend gives brother $XX capital upfront, which entitles him to:
  • XX% of all Net Operating Income (and mutually agree to NOI definition)
  • XX% of proceeds in the event of a sale, after mortgage paid off
• For any major capital calls (new roof, siding, etc), brother contributes XX% (perhaps same as NOI%)
• No 2nd lien on property 
• CAVEAT: consult an attorney!!