Question about partnerships on flips, and a mini rant...

[Edith TenBroek]

Hey all,

I have some questions about how you have structured partnerships on flips.  We have a friend who has the money to purchase the house.  We will fund the renovation through personal cash and renovation loans.  We (hubby and I) will do all the work.  Well, we will actually do a combination of work ourselves, and hiring contractors for the heavy jobs.  Friend is just a money partner.

What is a fair structure on this?  I don't think 50/50 is quite fair since we will be putting in similar money, but we will be doing the work.  We will all three own the house, so there is no risk for any one party on that front.

So now for my mini rant... before I posted this question I searched for other similar questions to see if it has already been answered.  What did I see over and over.... no real answers, but lots and lots of suggestions to seek a lawyer, be wary of partnerships, concern that friendships are broken up due to partnerships etc etc etc.  Lots of warnings, no answers.  To address this before the fact... yes we will see an attorney, a CPA, and have written partnership agreements and contracts before any house is actually purchased. 

So, anyone have an answer out there?  How would you structure this?  My thought so far are to offer straight up percentage on the money he puts in.  Alternatively, offer the friend a percentage of the final profits on the flip.

Our friend has already said he's interested and just need the details.  So what's fair in a deal like this?  Anything I'm not thinking of?