contractor partner investor profit vs. investment options

[Dan Chapman]

HI, My main partner is a general contractor we have 3 of us total investing in fix n flips. Two of us help find the property and I set up the loan or financing. My question is are there any good sources for factoring how profits are shared with our contractor who is doing most of the work with the fix n flip? Meaning if he does not put in any money what percentage of the profit would they normally get for doing the rehab work? Versus if they invested a smaller percentage? I have seen one that shows the contractor getting 50% of the profit with no money in the project just labor.

Thanks, Dan

[Charles Socci]

Sounds good to me!!  Obviously, the more partners you have, the more the pie gets cut up.  If it was the money person and the contractor, then 50/50 sounds great, especially if you have multiple houses going.  Some deals are going to be better than others, that is just how it works.  In a mutually beneficial partnership, you both need each other.  The contractor is happy because he doesn't have to put all his resources out (cash), and the money investor is happy because they can buy a project that needs more then they could handle themselves (a paint and carpet flip).  The contractor will handle his licensing, insurance, permits, actually getting the project done, and the investor handles the financing.  The contractor will warranty the completed work, which is even more benefit to the investor.