How to structure partnership/JV with two possible investors

[Peter Philando]

Here is the deal:

My neighbor and I formed a partnership (LLC) a few months ago to buy, rehab and flip houses. We have $40K in the business account but in the South Florida market does not make us very competitive for cash deals. My partner has been a buy/hold investor for a while and we work well together, although we haven't acquire our first flip as yet.

We currently have two possible investors that can add $60K (combined) more to the pool, however we don't really want to make them members of the LLC. They have no experience and at most minimal knowledge of REI or RE market. Their intention is to partner with us as members of the LLC. We will be meeting with both of them on Saturday to iron out how we can work together. We want to go to the table with a proposal already in hand.

How can we structure it so that they share in the profits of the flip but are not members of the LLC? In initial conversations they are not too keen on the idea of just loaning the money for a percentage return, but its not out of the question. We want to have operating control (decision making, hiring contractors, etc) through the LLC (basically having silent partners). Any and all advice would be greatly appreciated.

[John Kent]

Although, it is always easier to title the property in trust and split beneficiaries between the the LLC and the other investors. Then you don't have to worry about the situation where a partner wants to be bought out of the LLC.