Would you have done this deal? Made 45K but need advice!

[Jason Brown]

Hi BP! I am currently wrapping up my first flip and I wanted to run it by the pros here to see if the way in which it was structured made sense and if any of you have any would have done it differently or advised on a different split with my partner.

My current partner and I are wrapping up our first fix and flip property. My partner got it from a wholesaler and brought it to me with the idea that we partner up on it for a fix and flip. His proposal was that I purchase the property and contribute the rehab funds and that he would manage the rehab process (He's a GC so my faith in his getting the work done well has never been in question). All proceeds from the sale would then be split 50/50

Given that I am still a newbie I was initially skeptical about buying the house as well as contributing the funding for the rehab while he contributed no actual money out of pocket on a 50/50 split but his justification was following.

• 1. He was "contributing" money by bringing me the deal at a discount and could've have assigned it to another buyer for more money (which I think is probable)
• 2. He was also introducing me to the Hard Money lender who we used to fund this deal
• 3. He was managing the rehab and bringing his subcontractors.

So here are my numbers

Acquisition Price: 100K

Rehab: 90K

Holding: 6K 

Sale Price: 285K

Profit (Before taxes & commission): 90K

Profit (after split with partner): 45K 

I knew the ARV on the house was approx 300K and my plan, between the hard money lender and some private lenders, was to put up approximately 65K of my own cash into this deal. To me this represents a 69% ROI over an 8 month period which I thought was a great deal even after a 50/50 split.

For you guys working with partners: Would you ever consider a 50/50 split where you buy and contribute all the funding but still give away 50% of the deal? Did I expose myself to too much risk while he essentially incurred none? Is this a business model you guys would have pursued? Basically I'm trying to benchmark this deal and review the structure of my partnership. Anyone's advice or experience on flipping/partnerships etc would be greatly appreciated!

Thanks!