How to partner when purhcasing a rehab long term hold?

[Josh Michel]

I've found a 6 unit property I'm thinking about purchasing.  Every unit needs major work (some electrical, plumbing, etc.) but the purchase price still makes it a very good deal even after rehab costs.

I have a contractor friend that I've been thinking about trying to partner with on this property.  I'd be the money guy, he'd fix it up.  On a normal fix/flip you'd structure a deal where you do some sort of profit split after sale.  For a buy and hold it's a little trickier.  I'm trying to come up with a model that will work for the Money Guy/Labor Guy model for a buy and hold.

My initial thoughts would be I cover all expense of the purchase and flip.  Have him do the work to bring the units up to snuff.  Try to have him do the units 1 at at time so we can start renting one while continuing to renovate another.

Then do an 85/15% split of rental profits until I recover 50% of my expenditure, then have it drop to 70/30% until I recoup the rest, and then have it settle at 60/40% into perpetuity.  Any maintenance would be handled by him and come out of the profits.  Anything beyond the profits would of course be added to my recovery amount.

If he ever wants to sell we'd get 3 independent appraisals to determine an appropriate sale price and I would buy him out.  If we both want to sell we of course just market it and split the proceeds, 100% until I'm fully compensated, then 50/50% the rest.

My questions are, does my initial plan make sense?  Am I being objectively reasonable in my profit splitting?  What am I missing if anything?  Is there a better way to do it?  Do I need to have him put in 10% or so to have "skin in the game"?  Am I just flat out wrong in thinking this is a good idea?