Posted by John Merchant on September 18, 2004 at 11:43:33:
I’d suggest you approach this question by considering, and having him consider, what he thinks would be a reasonable return on his money.
On a similar deal I’ve just recently entered, the money partner agreed to:
- His money back our of first income
- 12% per annum on his money invested
- Equal split of remaining profits.
- I would (and did) incorporate a new LLC for him and draft its operating agreement.
- His LLC is in title on the property so he’s really in control of what, when, things happen on the property and he doesn’t have to worry about trusting me, but vice versa.
Just don’t settle for too little yourself, as you’re going to be putting out considerable effort and skill in making the deals happen and work, and once your percentage is settled, you can not easily increase it.
And please, have a lawyer do a good business partnership agreement in writing for you, as lots of p’ships do tank and fall apart, often because p’s can’t agree on what they did agree on, etc.