Your suggestions for splitting this profit...

[Brian Knox]

Looking for insight on how my sister and father should split the profits from their first flip:

The way it's worked:

• Dad put up $100k of the $114k sales price (bought on Auction.com in a "cash only" transaction). Sister put in $14k. Sister is paying for all rehab costs with her cash.
• Sister is managing all of the subcontractors (thus far: debris removal, garage door repair, HVAC replacement, deck refurbishing, flooring, and painting).
• Dad was looking for an investment vehicle besides savings accounts and the stock market, but would never have pursued Real Estate if not for Sister.
• Sister has a track record as a buy-and-hold landlord (of 10 properties) with some small rehabbing, but has never managed a large-scale flip.
• Sister will sell the house as a FSBO once it's done.

Likely to happen:

Profit: $25k

Selling price: $175k

Purchase price: $114k

Rehab costs & selling costs: $36k

How might you split up the $25k? Should Sister just receive a flat fee (for being the manager) plus her % of the profits? Do they split it 50/50? Should Sister be paid an hourly wage (this can get cumbersome)?

I appreciate any insights you can share and am open to all possibilities. Dad and Sister are both so laid back (and surprisingly successful for being so casual) that they didn't even bother to hammer out the details beforehand because they did not know how things might go.

Brian