Partnership structures Episode 3

[Jackson Long]

Okay guys, I don't know if I am asking the wrong questions, asking in the wrong place, or asking something so dumb that people can't type because they are busy rolling their eyes...

So moving forward I am going to bring new investors into my projects.  I've done a great job for my current guy, and he will stay with me, but I want to do my next round with friends and family.  Basically letting them get some of the benefit of what I am doing before I go fully mercenary and take over the world!  Well, maybe not that, but still.

They will put up the money. Depending on the deal they might hold the financing as well or that might wind up being the LLC for commercial stuff. They will need ownership, equity, and cash flow. I will do all the stuff (as I am now). I will identify opportunities, execute against them, put processes in place, etc. I will need ownership, equity, and cash flow.

The stuff I've read about so far typically seems to have partnerships or investors that get paid out rather than maintaining an interest.  For this round- the friends and family- I want them to build wealth with me.

What are some fair structure ideas?  I will bring experience and do "all the stuff".  They will write checks, sign things, and get checks in the mail.

Loosely, I think they should expect CoC equivalent to "ye standard" portfolio investment. So what is that? 6? 7%? then whatever equity growth they get... It seems like this would mean that any cash beyond 7% was mine- so if I was getting 14% off a property it would be a 50/5- deal... And that might work for the cash part- but what would the equity split be?

Mostly I am stuck trying to figure what the value of "the money guy" in a buy and hold is vs. the "make it happen guy".  Then I could analyze (god that looks misspelled) if those ratios would provide a reasonable return for the investor...

Anyway, I am basically thinking myself in circles now and would really appreciate some input.