Advice on potential real estate partnership

[Caleb Rohn]

Here is my situation.

I spend a lot of time on BP and I have developed a small portfolio of 4 residential rentals simply from learning on here and spending time getting to know my local market.  

Recently an opportunity came by my desk that was very intriguing as I often am scouring the various platforms for deals.  The situation was a house that was significantly undervalued due to a fire that happened in the house.  The property prior to the fire was on the market for around 1.3 million dollars.  Now the property is on the market for about half that.  The structure of the home is sound as a structural engineer has shared with us what needs to be replaced and what can be salvaged.  Now the different trades are coming in to to review all the different areas (electrical, HVAC, plumbing etc.).  I recognized early on that there is a good return to be had here, the caveat being I would have to reach out to a contractor/investor I know because with his business he could keep expenses lower and more safely add value to the deal with the crew he runs and we could stay under budget. Furthermore this is simply more cash outlay than i would want on my own

I offered a partnership on the deal to the contractor.  The contractor agreed and told me we would split equity based on whatever cash or cash value each of us puts in.  For example.  The house in its current state is 650k.  He is asking we both put 75k each down on the property to get it under contract under jumbo (500k inititial loan), then he would use his company and absorb most of the renovation costs which he says would be about 285k, but he can do it for about 225k as he won't be passing along his profit margin in light of it being an investment.  

In total he would be into it for 300k (reno + his portion of the down payment) and I would be into it for 100k ( I offered an additional 25k in cash above the down payment for the renovation as we expect it may go over with material prices jumping so high)  

As such he is telling me that he would own 75% of the investment and I would own 25%.  Now if you simply look at the numbers I understand how he came up with this.  If total investment is 400k and he puts in 300 and I put in 100k then that makes sense.  However, I am the one who found the deal, did the research on it, pulled everything together and then brought him in on it.  The more I think about it I feel there should be some added value in light of these things.  I am curious what this community thinks is appropriate in a situation like this.  He is obviously bringing his rehab abilities to the table but there is no deal if I don't find this and tee everything up for him. 

Any thoughts on this from others would be helpful.  Perhaps what he is proposing is appropriate.  I just need some insight from others.  

Thanks,

Caleb