Structuring partnership for private money - how would you do it?

[Alex M.]

I have what may be described as "one of those good problems to have". I'm a newbie investor - with one (cash flowing) rented property under my belt. I have a colleague who has some 'extra cash' and has stated a willingness to invest with me, but has asked me to propose a structure to the partnership.

This colleague financed my first deal - with a 5 year balloon at 4.25%. This time around they are looking to have "more of the pie". Meaning, they want to formally partner with an LLC and are looking to find an equitable way to split expenses, revenue and equity. They are not in Philly and would not play a role in finding the properties, fixing the properties, managing the properties, or even selling the properties if and when we get to that point.

What they are willing to do is turn around cash in a few days to fund deals that I can find.

This investor has stated they are not so interested in cash flow, but much more interested in capital gains. My concern with this is it is hard to predict future value of property and I don't want to invest based on an assumption of appreciation. I am trying to grow into being more of a buy and hold cash flow investor. So.... I'm looking for advice from anyone (or recommendations on who to talk to here on BP) that has worked with partners in a similar manner to purchase properties.

I am considering things such as 50% split of all revenue, 50% split of all expenses and 50% split of all capital gains on the sale of the property in a 5 year time frame - based on either cashing out at that time, or me buying them out (although I don't know yet how that could look in a way that made it a cash-flowing property for me still). Has anyone got experience doing this? What works well? What are some of the common problems and pitfalls that I should be aware of? How do I make sure I am not asking for too much, but that I also get both cash flow benefits and long-term cap gains? 

Thanks!