Possibly Flipping an Elderly Neighbors House

[Patrick Durham]

I live in a subdivision that was built in the 70's.  Four years ago I purchased a house that was in rough shape.  I ended up doing a total renovation, it turned out great and I have a lot of equity.  During that time I built a relationship with my neighbor (widower) behind me.  After some medical issues she decided it was time to move into a retirement home.

I don't have the money to do a full purchase, but I would like to work out a deal where  I renovate/modernize her home (it is the same layout as mine), then when it is sold I get a percentage of the profit.  I'm fairly certain she does not have a mortgage on it.  My plan:

1. Get current appraisal

2. Renovate the home

3. Sell it - I would get back what I put in + a percentage of the final price minus the original appraisal 

Example (60% to me):

$175,000 - Original Appraisal

$35,000 - Cost of Renovation

$275,000 - Sale Price (after paying all real estate fees)

--------------------------

$65,000 - Total profit

I would then get $35,000 back for materials then $39,000 of the profit.

My questions:

1. Would it be reasonable to approach her with the offer.  I would include her daughter in the conversation just to make sure the family is ok with the situation. 

2. What would be an appropriate cut of the profits to take?  Would 60% be too much, too little?

3. How do I properly protect myself in the transaction?  Add myself to the title via quit-claim?  Standard contract?

Thank you for the information.