He told me that we can't do that and that it is a partnership.In looking at the IRS definitions it states:PartnershipA partnership is the relationship between two or more persons who join to carry on a trade or business, with each person contributing money, property, labor, or skill and each expecting to share in the profits and losses of the business whether or not a formal partnership agreement is made.The term "partnership" includes a limited partnership, syndicate, group, pool, joint venture, or other unincorporated organization, through or by which any business, financial operation, or venture is carried on, that is not, within the meaning of the regulations under section 7701, a corporation, trust, estate, or sole proprietorship.A joint undertaking merely to share expenses is not a partnership.

excellent!

Great guy, very reasonable, and one of the reasons why I love real estate, building relationships.

If you give us a better idea, I'm sure the forum members will be able to give excellent recommendations.

I have an excellent closing attorney that handles all of my closings and title of work.

As most things, key is buying right and ensuring that you have the right relationships to do so. 

1) I would advise against going into business with family or friends, when large sums of money are involved somehow people just become irrational and take advantage of pre-existing relationships... but if you insist I would highly recommend that you write up some type of partnership agreement and have each partner have their own lawyer review it.2) If you want a partnership but have no idea what each person's role is, I have to ask why have a partnership at all?

This could be a strained relationship.

I would set up the numbers in excel and stress test my assumptions (i.e. run scenarios with cost being 10% to 50%+ more) and see if I can take the loss.

They already have an established relationship of 7 years, I don't see why he would say no.