How to partner with an existing property owner?

[Timothy Smith]

Hi friends, looking for a creative solution here as I've never heard of this being done. Apologies in advance for my lack of clear articulation.

I would like to come in as a partner on a property already owned by a colleague. This is a small multifamily that he is reluctantly selling to free up funds to make improvements on his primary residence. He is not looking to 1031, so capital gains will be factor, and he would rather sell than refinance into more debt and less cashflow. More importantly, selling means he no longer owns a cash-flowing asset. I proposed coming on as a partner in the property. We would boost the value through AirBnB-ing 1-2 units, increasing rents, and also using the detached garage for our own purposes -- storage, workshop, etc. He loves the idea, as we would both benefit from long-term appreciation, cash flow, and using the property as space for our businesses.

Question #1: How would I come in as a partner since he already owns the house? We would form an LLC to hold the property, then ideally refinance into the LLC. A sale to the LLC would trigger capital gains and increased property taxes, so that would defeat the purpose altogether.

Question #2: How do I figure out how much cash I should put in the deal to make it 50/50 ownership and profit-sharing moving forward? His current mortgage is 40% LTV, so a refinance would automatically put cash in his pocket. Figuring out how much I need to bring is what I can't wrap my head around.

Thanks for your creative thoughts.

- Tim