Need Advice on a JV Deal Structure for Cash Partners

[William Kwong]

Hey BP!

Wanted to run a JV deal structure by you guys. I'm curious of your input and advise per your experiences with JVs. - My partner and I are currently looking for flips and are in the middle of coming up with an appropriate JV deal structure for private money partners.

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Proposed Structured JV Deal:

- 3rd Partner to cover 90% of Purchase Price & 100% of reno cost

- We would put up the remaining 10% so we have some skin in the game

- We would do EVERYTHING from purchasing, design, dealing with vendors, managing reno / contractors (partner does construction mgmt), selling (I'm the agent), giving weekly updates, etc.

- 25% cut of the profit would be entitled to the silent partner once house is sold. 

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In your guys experience, does that seem fair? Or not appealing enough?

(Month of supply in our in-scope markets are around 2-3.5 months + 3 months renovation time. Say we profit 90K on a flip, they'd be entitled to 22.5K, for funding a project around 200K.)

I'm open to all suggestions, advise, past experiences. I'm sure there's some things I may be missing here. - Appreciate the help guys!

(Background of us: we've flipped a few properties, have rentals, been in REI for around 3 years, Am a Real Estate Agent. Partner has also been in construction his entire life.)

Thanks Guys!