Partnering on a deal with someone I just met

[Patrick Burch]

So I bought a fixer upper single family house that was previously split into a duplex with the intentions of getting it rent ready and putting a mortgage on it to do a BRRRR strategy. The numbers look good for that as I bought it for $27k, it needs about $20k in rehab and it should appraise for at least $80k. My bank doesn't require me to wait so I can put a mortgage on for 80% appraised value right away (estimated $64k) which puts me in the house with between $10k - $15k in the bank and a good cashflow on the duplex (about 15% return after expenses).

This is where it gets tricky...

If I rehab this to top market I could probably sell it for $120k.  For a top market rehab I am all in around $70k.  That's not a bad return on a flip by any means.  The issue is I can't fund that much rehab money, nor do I need to for the original plan.  This is where a new investor comes in to the picture offering to fund and run the rehab entirely taking 50% of the profit when it sells.  As partners we are looking at about $40k total profit or $20k each.

If I were to partner with the guy, how would you structure that agreement?  We are both extremely motivated by profit at that point so I feel like we have a common incentive to maximize that margin.  How could I get screwed here?  I might not even take this route but it is tempting because I am newer in this journey and I could use the cash up front to help push my real estate career forward.