Could someone double check my math???

[Victoria Townsend]

Hello,

I am investing with a partner that I trust, and we are trying to work out the proper agreement that will make this a win-win for both of us. For context, we both live in Los Angeles, he has all the capital, and I will be finding the deals in the midwest (and setting everything up). This is for buy and holds, and both of our goals is to cash-flow as much as possible and (hopefully) not sell for 10+ years.

Now, onto the details:

Since he's providing all the capital, we were thinking of structuring this where he gets 7% interest every year on his money first, and then we split the monthly cash flow 50/50.

All small expenses/repairs would immediately be paid for through the rental income. If there is a larger repair needed (e.g. new HVAC), he will pay for it and then add that amount will be added to his down-payment capital, and then he will receive all of it back when we sell the property.

So, lets say we buy a Duplex in the midwest for $80K, and it rents for $1200/month. This means he would put down $20,000 (25%) + maybe ~$4k for closing, for a total initial investment of $24k. If I'm paying him 7% interest every year first, does this mean that every month he will receive $140 first ($24k * 7% / 12 months) until we sell the home? And then we split the monthly remainder cash flow?

Also, if we buy a new HVAC for $5k after 3 years, he would have a total of $29k invested. 10 years from now if we sell the property for $100k, would he get his $29k first and then we split the remainder profits?