Setting up Partnership / LLC and loaning partner his half

[Matthew Diionno]

Greetings everyone! This is my first post, and I searched for a similar topic to see if this has previously been discussed, but I could not find one. Apologies if I missed it. :)

I am considering creating a partnership with a good friend of mine who lives in another state to purchase rental properties. He has some experience doing this already in that market, as he has 7 or so properties in that area, but he uses hard money to fund most of these. 

I have some cash I want to invest, and he is looking to do more deals, so we thought we shoudl team up! So we are trying to decide how to split things up fairly. Basically, we are thinking about setting up 50/50 ownership in an LLC that would own these properties. I would contribute my half of the cash to the LLC to buy the property, and I would loan him his 50% cash needed to fund his half. So I would be the hard money lender to him or his own LLC that would own the other half of this new entity.

I think this would be advantageous to spread some cash flow, as technically the loan would be paid each month whether rented or not (during the term of loan anyway). Plus, if for some reason things go bad, my secured note will take ownership of the other half of the property, so I would then own it outright without any 3rd party debt. On the other hand, I might be tying up too much cash in one deal / property, and I am not diversifying as much as I could. 

What do you guys think? Is this a reasonable approach? Or is there some significant risk I am not taking into account? I would greatly appreciate any feedback or thoughts from anyone here, especially if anyone has similar experience with owning and lending on the same property or LLC.