Partnership with contractor

[Vahid Mostafavi]

I am starting a partnership with a contractor. He is completely reliable and I do not have any issues with him. I will be putting in the cash and he will only charge for the cost of material and labor, and completely exclude the profit he makes on his typical renovation jobs. Currently we are looking into BRRR deals and fix and flips. My question is how should we share the profit? what would be fair? let me explain with an example:

Purchase price: 200k

Rehab cost: 100k (with a non-partner contractor)

Charge by my contractor: 50k (only material and labor)

After Rehab sale price: 300k 

Profit: 50k

My question is how should we share the 50k profit? 20%/80%? the problem is that I would 40k for my 200k investment, which is a good 25% return, but he makes 10k, while he would make 50k for a regular renovation job, so this deal would not be interesting to him.

I hope the situation is cleat, I would appreciate your insights.

[Jon Crosby]

@Vahid Mostafavi  Got it, now I understand better.  I would give him the $100k then as his time is money as well, HOWEVER, for that amount I would expect him to sign some kind of covenant that reduces his equity at certain tiers if he does not complete the project within a certain time frame or hit certain agreed upon milestones.