Hi. New to the forum but will be visiting frequently ;-) It would seem easy to split profit and costs when 2 investors split the cost of a real estate investment 50/50.

Say there is a 100k property, one can only invest 20k while the other invests 80k. Figuring that all work is split down the middle, how is costs, rent profit, appreciation profit, etc. best handled?

Thank you.

It all depends on what the two parties have agreed to. One way you might want to set it up is to treat the labor as one item and the proceeds upon sale as another. Set it up as a business and pay both parties out of the opperating fund for labor. When it sells then split the profits acording to the investment ratios.

Every agreement needs to be formalized in writing. For asset protection the properties should be held within an entity such as an LLC or S-Corp depending on what type activity your going to be involved with. It makes a lot of difference which is best.

Depending on what state you are in, the use of a Land Trust may be considered in addition to the other entities or for small investments of limited time it may be useful alone but depends greatly on what your state laws are.. how good they are in defining Land Trust. Only about 12 states have good Land Trust laws.

Be realistic. Partnerships are like marriages and need to have pre-neps for the protection of both. Formal agreements on how cost and profits are distributed and what the responsibilities of each part is are key elements. After all... divorce does occur in partnerships as well as marriages.