Anyone ever purchase for low then share upside with owner?

[Zev Dobuler]

Hi Everyone, I’m investing in Fix & Flips in Oklahoma City and Philadelphia. I was wondering if anyone ever tried to make a deal with an owner where they purchase the property for much below the asking price, pay for the rehab and then split profits above a certain sale price? This way I’m protected that I purchased low enough while the owner can benefit from the upside if I surpass a certain number.

Has anyone ever tried to do something like this? If so, please tell me about your experience.

Also, I’m wondering if there is a tax disadvantage here. When he sells me the property he pays capital gains tax. But when I sell the property and give him some of the profits, wouldn't he be taxed at his regular tax brackets and not capital gains levels?

Thoughts? Thanks!