Structuring of Partnership for Fix and Flip

[Brad B.]

I know there are lots of discussions on this topic but I haven't found one that completely fits our situation.

My brother and I are looking into forming an LLC to fix and flip with the plan to buy and hold once we build more capital. We both have full time jobs. We are planning to work together to find deals, analyze deals, raise capital, network, etc. However, we don't have the time to be managing rehabs.

We have a close friend who has no interest in finding/analyzing/networking, however, he is really good at performing actual rehab work. My thought is that my brother and I would handle all expenses, loans, find/analyze deals, while our friend would handle the rehab, including hiring and managing contractors if he isn't able to do the work himself. We would split profits 33%/33%/33%, however our friend would not be paid for his time. Our friend has no monetary risk and his investment is his time. My brother and I would have risk but we don't have to do much day to day management and we can keep our full time jobs.

Please give me your thoughts. We want to make this fair to everyone involved but not try to force something that won't work by splitting profits too much.

[Mike Jones]

If you dont spend the time to manage the rehab your looking at all sorts of problems and setting yourself up for failure:

• Contractors not doing it the way you want it
• Redos then cost you big time
• Workers standing around doing nothing without direction
• Thefts of materials, tools, etc
• Workers not closing up or locking it down well enough and break ins happen
• Vandalism
• Most people working on your home just dont care as much and get lazy, again costing big time and not getting the same quality as if you yourself were doing it.