Portfolio Partnership Deal Structure Need Help

[Eric Swint]

Need some help wrapping my head around an opportunity, as well as making sure this partnership is a fair deal. I don't know what I don't know.

I have a partner that wants to purchase 2-4 unit multifamily properties with a line of credit. I find and structure the deals using very conservative numbers in the BP calculators that cash flow nicely. The properties would then placed in an LLC where he is considered 100% owner (I would have first right of refusal). The P&I on (20yr fixed) will be paid to my partner. He receives an interest rate of 8% from me, his interest rate to the bank is 5%. He does not want to be an active participant in these deals.

I manage and renovate the properties for a 8-12% of rental income fee depending on the property with the expectation that these properties are to be transferred to my LLC at a 7 year balloon mark. The 25% down payment he supplied through his credit line for the initial purchase will be nearly payed off (+ interest) at this point.

This is where I'm having trouble understanding. I feel as though I'm missing some key pieces of information to make this partnership work.

1. Will I refinance through the lender to a new 20 year fixed conventional mortgage?

2. How do I obtain ownership of all the properties acquired? 

3. Is it possible to be included on the initial LLC to simplify the property transfer process?

4. What else am I missing here? Any and all questions and observations welcome.