Starting a Partnership

[James Scott]

Quick recap of my current/first deal:

I am buying a duplex with my contractor/family friend. He brought the deal to me on this occasion, before this he was just inspecting and giving quotes on properties I was analyzing. The deal will cash flow well and force equity right away. We agreed to put in 50/50 of the money needed to get the deal done and I put the property under contract and used a conventional loan as financing. He is fronting the costs of the labor and supplies, and pitching in on 5% of the down payment and closing costs, with what we have estimated the rehab to cost.

He suggested forming an LLC together, which I am not in favor of. I don't want to have a business partner just yet, but I do want to partner with him on this deal so far. I suggested the idea of being a general partner and limited partner in the deal, him being the limited and myself being the general. This way I still have control of the property and deal, while he is guaranteed his income, as well as not having to be liable for the property, as the general partner will be. He agrees with the idea.

I’ve heard about this style of partnership on the podcast, in much more sophisticated deals like syndications. I would assume it is possible to do this on a small deal as well.

If anyone has good sources on how to set up this type of agreement or advice/experience, I would greatly appreciate it.

Thank you all in advance,

James