How to structure partnership for BRRRR with cash partner

[Philip Pape]

For my first deal there is a good chance I will be partnering with my GC, who is also an investor. He's flipped many houses successfully and has a solid history of estimating the rehab costs. We're looking at a SFH to fix and rent together, both as an investment and a learning opportunity for me. The reason we want to rent for at least a year (instead of flip) is to get past the short-term tax hit.

Here's the good news: he can finance the entire purchase and rehab with cash.

My question: What is the best way to structure the partnership from the money side, assuming I have very little available to put in up front?

I would like to have some creative solutions to bring to the table rather than put the onus on him (although he has done many partnerships before).

For example, would it make sense for him to take a note back and a lien on the property to cover my 50% (e.g. interest-only, 7 or 8%) during the rehab, then convert to a traditional 30-year payment (with him) or re-fi my portion (with a lender)? What are the implications of re-financing since the property would be in both our names (or our 50/50 LLC) if I didn't hold up my end (would he just buy me out)?

I'm thinking we would split everything from buy to rehab to expenses and rent...and eventually profit from the sale.

I'm not trying to make this too complicated, but it would be my first such arrangement, and I'd like it to be right from the start and of the utmost integrity.

I value your input as experienced investors in the BP community...thanks!