I’ve got a partnership w/ two of my uncles. We have two houses on rent. we use the profit from the homes as a single pot where we pay for the maintenance expenses (different cash flow from each). We are close family and they trust my judgement. Another of my uncles wants to join for the next home we buy. How do we split/ allow their buy in to our partnership for the next home? I don’t wanna add extra accounting of maintaining expense/cash flow from the next one we buy as a larger group Thoughts?

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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.

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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:

It’s whatever you want it to be.

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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

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