Rental Property Partnership - What to include or examples?

[Daniel Dietz]

Hello All, 

I am looking for feedback or examples of things to cover in a '50-50' partnership that will be investing in buy-n-hold rentals. One partner will 'silent' and be bringing the down payments of aproxiamtely 20-25%, and the other partner (me) will be doing all of the aquisition, rehab management, finding tenants, ongoing PM, etc.....

I am currently involved in 3 other partnerships that own buy-n-hold rentals, but all of them are 3 people, so '33-33-33'. Majority vote rules for most things (unanomous vote is needed for some). This simplfies things in some ways as there is never a 'tie vote' ;-) 

I am primarily look for ideas of how to deal with; what if one partner wants out before the target investment timeline (10 years +) , what to do in case of the death or incapacitation of a partner, and things along those lines. 

In my other partnerships, we have written ways of valueing properties if a partner wants out, so I think I have that covered. 

These would most likely be set up as LLCs, as my others are also if that makes any difference.

Thanks, Dan Dietz

[Carl Fischer]

@Daniel Dietz

Write it down like you did the other agreements. Get a neutral 3rd party to vote on 50/50 issues. Make control all yours but all money is split 50/50. 

In a split up, I also like the option for one party to price the property and the other party to buy it or sell it. Seems to keep valuations pretty fair or you can agree on another valuation method. Get it all in writing ASAP.