How would you structure a partnership for this deal?

[Garrett Danielson]

Looking for some feedback on structuring a partnership.

I have a multi-use property under contract for $400,000 that will rent for $3,200 / month.

I have fronted $3,000 of earnest money and will put my commission from the sale toward some modifications that will allow it to rent at $3,200. I have a local lender who has agreed to loan $250,000, 5.25%, 20 years amortization with a 10 year balloon and 1 point origination. I unfortunately cannot qualify for the loan, so I'm looking for a partner to take on the $250k loan and bring $147k of equity.

I'd like to structure the deal so that I have equal ownership interest with my partner, but he / she takes the majority of the cash flow, as he / she will carry the debt and bring almost all of the equity. After debt service, taxes, insurance, and reserves, I'm estimating monthly cash flow of $1,100. I'm a licensed broker and will vet tenants and manage the property for $100 of this every month. That leaves $1,000 / month to investor partner. ROI on his / her $147,000 is 8.2%.

I'd like to eventually buy-out my partner. I can do this either by house-hacking the place in 2 years' time (it's a house + large outbuilding) or structuring a gradual buy-out as I acquire the capital. You're probably asking why the hell I would want to do this deal taking home $100 a month; good question. If I had the capital, I'd do it myself. I don't, so I'm looking to build a partnership that is a good deal for my partner and allows me to eventually take full ownership within 2 years' time.

Here's what I'd like to know:

1. Do you like this deal?

2. Can a tenants in common agreement include an arrangement that would allow me to buy "shares" of ownership over time? Is this appealing if you're on the other side of this deal?

3. As an investor taking on the debt and bringing all the equity, is 8.2% with an exit strategy within 2 years appealing?