Tax treatment - Lending for a fix and flip

[Kurt Pourbaix]

We partner with a guy who does fix and flips.  He buys the house and does the rehab.  We loan him the money both to buy the house and do the rehab and we share in the profits when it sells.  We don't charge interest per se.  It is not a capital gain because we never own the property.  It doesn't seem like it would be a business activity (subject to SE) because all we do is lend the money.  Would that mean that is it an investing activity (and classified as Investment income)?  And if so, would expenses of running our business be considered investing expenses and subject to the 2% rule?   Thanks for your help.