Partner with Capital 50/50 Split. Thoughts?

[Jacob Lapp]

Hey Everyone,

This is my scenario. My ex real estate broker wants to partner on a deal. He has no experience with investing and isn't handy. My strategy has been claiming residency at a multifamily every year which I am planning to do this year also and wouldn't want to tie much capital up in a lower yield partnership. He proposed funding the down payment and for me to do rehab and manage property for 50/50 split. I just found one I think looks good. Listed for 215k its a duplex once rehabbed should collect $2500 and after piti, utilities, cap ex, vacancy should cashflow around $1000. With 50/50 split $500 a month each. Purchasing as investment the down payment will be close to 60k which my partner will pay and the rehab will be around 25k from a licensed contractor ( I will do work and fund) probably close to 8k in materials plus labor. then his role is over and i become property manager and maintenance guy. At a 10% property management fee ($250 per month) I will make up the difference in his down payment and my rehab cost in 11.6 years. For his COC from putting that money down is 10% without accounting for appreciation in rent or gained equity. And mine will be higher but I am doing the heavy lifting. We will be working with an attorney but I have a few questions.

My questions are

Does this seem like a fair partnership?

How would you structure this in terms of who’s name is on loan/title?

Should we create an LLC?

Should we create a joint bank account where reserve is kept, rents go into, bills are paid from etc.?

I was thinking of having a 10 year term to then re-evaluate the partnership and at that point we could split the cost of property management. Does that make sense?

I’m sure I left some details out but any help is much appreciated!