Structuring Profit Sharing

[Mary Patton]

Hi everyone, so glad to have found this site! I am exploring a single-family flip opportunity (first time) with a friend and would love some guidance as to how to structure the deal. My friend is putting up the cash to buy the property (no loan needed) and I will be handling the renovations. My friend does not want to be involved in the reno and trusts me to oversee it 100%. What would be the fairest way to divide up any profits from the sale of the renovated property? Also, does anyone have a template for a partnership agreement that would work in this scenario (form an LLC, with my friend as the sole owner of the property since they are putting up 100% of the capital?). I would appreciate any guidance anyone can offer. Thank you.

[Joe Homs]

@Mary Patton there are many ways you can structure this deal. When investing with others you should protect each other from each other. The best way is for each of you to have an LLC and own the property 50-50 (if that is your split?) He would then place a 1st TD loan on the property to protect his interest. Who is paying for the reno? Have you flipped homes before? Do you have a contractor in place? Owning in an LLC protects you and him from liability instead of having it just in his name, yours, or both.

Good Investing...