How to enter into partnership with Private investor

[Salomon W.]

Hi,

So, I have done quite a few deals  in buy and hold but not in flipping. I am planning to start flipping properties (buying distressed properties and fixing it up) in a new neighborhood one hour flight away from where I live. I have a potential private investor that trusts me and is willing to invest into my deals. 

I currently do not have any of my own funds to invest, so I was pre-approved for a hard money lender which charges a fixed rate, 90% loan to purchase the property and 100% rehab loan. I do  need  the initial 10% to start of with all holding fees to make it work. The private investor is here willing to lay out the 10% and all holding expenses including monthly interest-only payments to the hard money lender.

Furthermore, I will be working with a local contractor that is not business minded, but is a very honest individual that a few of my close family members have happily done business with him for a little while. He does a good job. But, he wants to have some equity in the deals that I do. Also he lives local and I am a one hour flight away.

1) How and how much equity of the profit should I offer the private investor? 2) How would I connect the private lender into the legal documents of the deal? Should I put him on the LLC, or should I have a separate agreement between me and him about his share of the profit? 3) What are the different payment or equity options to provide the contractor?

Part of the issue is that the Hard MOney lender wants to verify the eligibility of everyone on the LLC, the problem is the investor has no income or experience on his name. The same issue would when we come to refinance the property with a conventional mortgage this may also be a problem as he has no income on his name.