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silent partner - division of profits?

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  • silent partner - division of profits?

    I am setting up a property development company with a family member. He is investing 500k. I am investing 20k. He is the main financier but I have my own building company and have the knowledge, experience of the London property market, contacts with estate agents, property finders etc and am privy to knowledge of properties coming on to the market before they do so. I will also be putting in a great deal of work and research to find the correct property at the correct price.

    I will also carry out the work on the property - this aspect of the job, the company will pay me for - albeit at a reduced rate. The family member will be a totally silent partner and doesn't live in the UK. He just wants to see a return on his money with as little involvement as possible.

    My question is this - how do we divide any profits? Should it be directly proportional to the financial investment? (which is what the family member feels is correct) In this case that would be 96% to our 4% which is a pretty low return. Or is the fact that I am the one with the expertise and contacts etc relevant? And that I am doing all the leg work? I know that there isn't an industry norm but does anyone have experience of this?
    Any help would be gratefully received.

  • #2
    Re: silent partner - division of profits?

    best to sort this out and get it in writing. You need to state a percentage.

    Here is a good link. Read on page 18. http://www.businesslink.gov.uk/Finan...BFcomplete.pdf

    Hope that helps