Funding Fix/Flip with Private Funds

[Saim Chaudhry]

Hello,

A local real estate investor who has taken me under his wing and is helping me learn told me something that interested me. He said one of his friends flipped houses with no money out of his own pocket. I am still fairly new and learning, but this was an interesting concept to me.

He funded the purchase price of a deal with an investor, and funded the rehab with another investor partner, and they would split the profits.

My question is, how hard is this? I have never dealt with private funding, so I am not really sure as to what it entails. Do private funders give you the money in your bank account and sign a contract with you? What if a deal goes bad, and money is lost, who is taking the loss? What kind of protections should I have in place for myself, and what kind of precautions and protections will the lenders be taking. Also, what is a good split as far as percentage if you have someone funding the purchase price, and someone else funding the complete rehab. Would it be worth it to market the property on the MLS through an agent after or would the commission split be too high, seeing as the profits will also need to be split 3 ways somehow. Thanks!