How should I structure business for my first flip?

[Jake Silcott]

Hi everyone, I have a question about a simple deal structure for a fix n flip. A family member has agreed to fund a flip for myself and another partner. We will split the profits equally 3 ways. We will use my LLC as the business entity and the funds will come from a HELOC. I am the only member of the LLC.

How should a deal like this be structured and how should the profits be distributed? Should I have the LLC borrow the funds from the family member and secure it with a promissory note and deed? The LLC could then pay the loan back with a profit share after we sell.

Or...do I need to have a JV agreement between the 3 of us? Or both?

What about my other partner? Do I need to 1099 him when I pay him his share of the profit? I will of course consult my tax advisor and attorney, but I'd like to hear all your thoughts as well.

Any insight on how to best work this is much appreciated. This is my first deal. We close on it in a couple weeks and I'm fired up!!

Thanks a bunch!!