Multi-partner Deal Question

[Vanessa Brostovski]

Seems like I've been full of questions since deals come up now that I'm in real-estate investing! I have another question for those of you out there....there is a good deal that has come up for me and my partner and the confusion is coming from how to deal with private money. In this scenario, some if not ALL of the funds for the deal will be from a private (not HARD) money lender that we know. However, since this is a rehab deal and will be sold (not sure if it'll be held for 1-6 months), how do you pay out your private money lender? Contractually, do you promise them a certain percentage? However, what if you don't deliver on that certain percentage, i.e. 10% profit on their money, if the deal goes sour after you have purchased it? I guess, without getting specific legal advice, how does it work with the amount you pay back to your private money lender. For example, if they give you $80,000 for the deal and your numbers don't work out when you sell the deal, and you'd promised them $8000, ? That's basically what I need to know, to ensure that no relationships go sour in the process.