Structuring partnerships and/or private loans

[Emily Simmons]

I'm curious who has done this successfully in the past and can offer tips on the Do's and Do Not's so that both sides win.  I've heard a couple times that someone has had provided the sweat equity with their partner just offering the capital for a 50/50 split.  One person said they got the short end of that stick and another said it was a great launching pad.  I've heard other's say they prefer to essentially structure a private loan with the capital partner vs. any percentage in the property (or business).  No nitty gritty details were given, however.  So what's fair for both parties?  If you're doing all the work, should you take an extra percentage for that?  Or get paid as an employee before the rest is split 50/50?  

What's worked for others and what hasn't?  What are some red flags to watch out for on either side of this kind of deal?

Thanks for any insight!

[Chris Seveney]

Quote from @Emily Simmons:

I'm curious who has done this successfully in the past and can offer tips on the Do's and Do Not's so that both sides win.  I've heard a couple times that someone has had provided the sweat equity with their partner just offering the capital for a 50/50 split.  One person said they got the short end of that stick and another said it was a great launching pad.  I've heard other's say they prefer to essentially structure a private loan with the capital partner vs. any percentage in the property (or business).  No nitty gritty details were given, however.  So what's fair for both parties?  If you're doing all the work, should you take an extra percentage for that?  Or get paid as an employee before the rest is split 50/50?  

What's worked for others and what hasn't?  What are some red flags to watch out for on either side of this kind of deal?

Thanks for any insight!

 50/50 is probably most common scenario. The key / red flags are really based on how this venture is setup. You ALWAYS want to play the worst case scenario out in your head and have that conversation with your partner before it happens and have it in the agreement. It is much easier to negotiate and consider when you know what hits the fan BEFORE it happens than it is after it happens. 

The key is you have a need (most likely lack of funds), and you want to partner up with someone whose challenge is time (not money). Make sure you both have same morals and values as well. If you have different morals or values, I would say pass - I have taken $ from people in the past because I was excited to have $ come in the door, but ended up regretting it and learned my lesson, since that time I have turned down several people because we had different values.