Partnership where one person pays down payment

[Ben Ashcraft]

Does anyone have experience setting up a partnership where 1 person paid the down payment  and the other person found the deals, tenants and managed the property? Or even a similar setup where 1 person was responsible for the lion share of the up front cash?

My wife’s boss recently said he would be interested in partnering up on some deals if it would help my wife and I reach our financial goals quicker (which I’m a big fan of myself). He said that he has almost unlimited bank financing. 
My wife and I already own a home as well as one rental, and a contract on our 2nd rental that we close on in the next 3 weeks. I’d love to partner with this guy if it makes sense and I’m passionate about real estate but don’t know what the best approach for us would be!?

Would love any guidance from my real estate investment compadre’s!

Thanks in advance!

[Jonathan Taylor Smith]

Instead of "partnering" with this person on the equity side, it may be best for you to just have him be your lender on the debt side - and you keep all the equity for yourself while he gets a nice return. However, the part about "He said that he has almost unlimited bank financing" makes me wonder if he has the cash to be your debt lender or he only has the income / credit to just put down the 20% with his lender providing the other 80%.

In that case, you'd likely want to create an LLC with each of you owning a certain percentage of the entity (like 50/50, 60/40 or even 70/30), and then you work together to find and fund the properties with him providing the down-payment, and a lender the other 80%.

If not 50/50, its debatable as to who should be in the majority equity position... I've heard sound arguments on both sides, but I generally feel that the money is the easy part. I can get money from anyone, but not everyone can find, negotiate, rehab on budget, rent and manage / maintain a profitable rental property. I feel that skill set and a track record of success in that is far more rare (and thus valuable) than someone who has money to write a check. But then also, don't be greedy, as in the cliche "50% of a deal is better than 100% of no deal".