How should I structure a FLIP joint venture with GC?

[Vee Vu]

Hi everyone, I'm planning on doing my first flip, and I don't know much about renovation. I found a good GC with great references. He agreed to help me out if we split the profit (70% to me, 30% to him). I will put my money in for down payment (hard money lender, this is his connection). He will get paid for the renovation job, and plus 30% of the profit. He will show me the process of doing flip, and teach me as much as possible.

Will this be a fair deal for both sides? I just feel like I'm taking all the risk here, because his renovation job gets paid for sure, no matter what, and the profit is a bonus for him.

Should I ask him to contribute a part of down payment (how many %)? or closing cost? or a part the renovation cost?

Thank you!

[Jesse Blaine]

Are you paying the GC full rehab cost and giving him 30% of profit?  If so I don’t think that’s a good deal.  

If he wants a profit split I would have him do the rehab at cost and then do a split.

Better yet, have him put some money in or pay for part of the renovation and the do a 50/50.

The way you describe it, he doesn’t have any skin in the game other than losing his bonus money.

There are many ways to structure the JV. Also JVs in general are sticky in legal terms. They work great if both parties perform, but are hard to enforce if one party breaches.

We've had them work out, but only because there was a lot of mutual trust.