Initial investment question

[Erik Schilling]

Hey guys,

My buddy and I are about to start flipping some properties. He is a GC and would be doing/ subbing the work. My question is what would be a good split for investment and ROI? I would be covering more / all of the down payment, while he would be buying materials and covering labor costs. I was thinking about a few different scenarios.

After house is ready to sell, what are some good ROI options for me?

Initial investment paid back + ROI% + % of profits?

Initial investment paid back + % of profits?

Initial investment paid back + ROI%?

Initial investment paid back + flat rate?

Depending on the scenario, I could make more on some properties and he could make more on others (while I get my payback too).

My idea behind this is that I have more cash into the property, but he would pay for materials and labor, so we would both have a decent stake in the investment.  I will have more hard cash into the property.

Any suggestions would be greatly appreciated.

Thanks!

[Sam Erickson]

Sounds like you can't do it without him and he can't do it without you.  50/50 split of profits?

From your position I think I would be happy with 50% of he profits. Since he is also investing capital but also his time doing and managing the project I would argue that he has more invested then yourself.

Also don't get caught up on the ROI% and % profits, I feel they are one in the same. Your ROI is going to be the profits from the flip. If your looking to get a percentage return on your funds(like a bank does) and also get a split of the profits, sounds like your looking to double dip.