Suggestions on Partnership split with contractor on fix/flips

[Nathan Smith]

I have a contractor that would like to partner with me on a few flips. I would be the money guy and he would handle all the renovations (manage subs, etc) What would be a good split?

[John Casmon]

@Nathan Smith I would strongly urge you to ensure the contractor has skin in the game if you want to explore an even split. Otherwise, pay him like a contractor and offer up a bonus at closing for hitting key timelines and staying on budget. Consider a penalty clause as well for not hitting key deliverables.

Speaking from personal experience with two separate contractor partnerships, the opportunity to make money does not seem to drive urgency with contractor's the same way the threat of losing money does. In fact, a few psychology studies show that people are more afraid to lose money than they are motivated by the chance to make money.