I am starting a partnership with a total of four people. We will be creating a LLC with the intention of investing in Residential Real Estate. Two of the partners will be contributing the money and two of the partners will be doing all the work. I will be one of the people putting in the work and I want to know how to value my "sweat equity". I would never get into this arrangement unless each partner owned exactly 25% of the LLC, or at least had the potential to own 25% within the next couple of years. How do I go from a situation where I`ve put no money into the LLC to owning 25% of it?
I will not need of the income the LLC is brining in, so my share of the earnings will be reinvested. Will that reinvestment be growing the total value of the LLC or will it just be paying off the partners who put in money.
As far as dollar figures go. We will be starting with around $100,000. So is it as simple as waiting until my share has earned $25k, and then I`m completely vested, or does it get more complicated than that?
Any help would be greatly appreciated!