Getting a loan with a shortsale on record

[Shane Pearlman]

Howdy folks, I could use some creative ideas...

A long time business associate of mine has been watching my growing real estate adventures of the last 8 years and has approached me to partner. He has a fair bit of cash, is a high income earner and I trust him implicitly and would gladly be in business with him. The challenge is a strategic personal residence short-sale on his record from just over three years ago. As I have talked to banks, no one will loan with him on record. Some of the commercial lenders have told me that if he is under 20%, they might consider ignoring his existence as long as I sign (which is fine). With his capital in play though, we were aiming for a more balanced partnership.

At this point I am looking for creative ways to structure the deal so that he ultimately ends up with a solid piece of the deal, but we are not blocked on the loan.

I personally just bought a 1.5M property 3 months ago, so I don't have enough cash at the moment to buy the next apartment alone, and then bring him in afterwards. That would be the obvious solution, but it won't work right now.

Other ideas? I was wondering about forming an LLC, having him loan the money to the LLC (with paper), then after the deal has closed and a bit of time has passed, paying off his loan with shares in the LLC. Is that viable / legal?

Anyone been successful in this situation?