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Mentor
Wouldn’t you just assign percentage ownership?
For example, if the partnership will be worth $100,000 after purchase and your uncle contributed $10,000, he owns 10%.
If you wan to even things out, he will either have to contribute more to the partnership, or buy shares from partners.
Subject Expert
Are the houses close to the same value? And/or close to the same cashflows?
If there’s 3 houses:
House 1: 33% you / 33% uncle 1 / 33% uncle 2
House 2: 33% you / 33% uncle 1 / 33% uncle 2
House 3: 25% you / 25% uncle 1 / 25% uncle 2 / 25% NEW uncle 3
If each house was $100k, then the existing 3 partners would own around $91k of the $300k portfolio (ignoring a little rounding), which is around 30% of the portfolio. The new uncle would own $25k of $300k, which is just under 10%. For ease of rounding, I’d have each existing partner sell 3.3% of their stake to the new uncle, and the new agreement would be 30% for each of the existing partners, and 10% to the new uncle. That shows that the original partners have contributed more capital and have been in the partnership longer.
Now, if the house values / cashflows are all different, then the calculation gets tricky. At the end of the day, it comes down to how everyone agrees to structure the operating agreement. But at a quick glance, the new partner getting 5% to 10% is probably around right:
Subject Expert
It’s whatever you want it to be.
If he only is buying into the third house then you should setup a separate bank account for those cash flows and related expenses so not to commingle the profits