best way to structure partnership when 50/50 DP but 1 does PM

[Catherine Decker]

Hi BP Community,

Looking for some sage advice on how to best structure a partnership for a deal I am working on right now. Have been looking for answers to this question in the forum, but nothing quite fits.

I am partnering with one other party. We are both putting in 50% of the cash for the down payment. I am doing all of the project management, though - so I am looking for some advice about how to best structure how much each one of us gets given the amount of time and effort.

Also, in terms of the rehab funds - I thought we should each contribute to an account that is dedicated to the rehab of the house (or get a HML, if possible) and just draw down that account for the rehab and holding costs.

Thank you in advance for any and all suggestions.

[Ryan Flamm]

My guess is to structure the deal just like you would with any management, set aside X amount of rental income towards the management side of it. That way it won't matter if you manage it, or you change your mind and have someone else manage it.

[Catherine Decker]

@Ryan Flamm Thanks for that. I suppose I wasn't clear - this isn't a rental property. It's a rehab of a Victorian that we will sell. (or I may buy out my partner).

What I need to know is the best way to structure the distribution of profits - or how much the project management of the rehab should be worth? It's a historic house - think "Rehab Addict" so it's pretty significant in terms of vendors, quality control etc.

Thanks again.

[Jonathan Godes]

If you are doing all the PM duties (I assume you mean GC as well?) then you should just charge the deal 10% of the renovation costs and that goes to you individually outside of the deal.