Flip Project Management in Exchange for Equity

[Erica Ricketts]

Hey all-- 

My business partner (realtor) and I (CFO) have the opportunity to partner with an investor who wants to do an extensive flip. This project will take at least 6 months, and about $125k to complete. 

House purchase: $80k
Cost of repairs: $80-125k (waiting for foundation inspection)
ARV: $350k
Timeframe: 6-8 months
(All of these numbers are overly conservative in order 

We are in the middle of negotiations regarding our individual roles. The investor is an older gentleman who does not want to do the project mgmt nor does he want to deal with any of the finances, whereas this is what my partner and I do regularly. I suggested that we take a cut of the gross equity and sacrifice the real estate commissions for the future sale in exchange for our project management. My question is two fold: 1) How much of the gross equity would you be willing to sacrifice as an investor? 2) Would it be better to set this up as an LLC with us as the GP and the investor as the LP or two equal partners?

This will be our first time utilizing this structure so any information or experience that you have would be great!