Help with a deal structure . . .

[Yusuf Wilson]

Hi,

I have an opportunity to JV a deal in Philadelphia and wanted to see if you could provide any insight.

It's a 6 BR/2BA 1,878 sq ft 3-story row house in Philly. I've been presented with an opportunity to JV this deal with the following structure:

• I fund 100% of the deal for 50% of the profit
• They will facilitate the managing of the project (rehab, selling once completed, etc.)

One of my concerns is that they have no skin in the deal (i.e., if the deal goes south, I'm on the hook for the money owed). Also, what if there is an unanticipated cost which may require additional funds, thereby creating another challenge.

Is this a normal deal structure for someone who brings the deal to the table? Can anyone suggest any mechanisms that can be incorporated to reduce my overall exposure or protect myself in the event that the deal goes south? 

Any insights that can be provided would be greatly appreciated! Thanks in advance!

Yusuf Wilson

[Barbara G.]

First of all I don't see that there has been any negotiating here. They have nothing to lose.  I certainly would not do this

Look for something else.  You have no control here and no leverage.  Do yourself a favor and pass on this.  Go find yourself something much better.  Now you have something to compare your next deal to,  You haven't even presented any deal numbers how can anyone even know what you are doing here.