Should I agree with this partnership?

[Cristiana P.]

Hi Guys,

I am going to buy a property to Flip and I just convinced a friend (who did one before and is really handy) to do a partnership with me. I have the money and he has the time, so I will finance it, find the deal, deal w lawyers, realtors and banks and he will manage the rehab process. 

The tricky part is he is more comfortable if I put the house in my name and I just pay him some amount for his work. I am not sure if this make sense, as in that case I can just hire a GC. 

I feel that if he receives some kind of percentage of the profit he will be so involved as me and fell it as his project.

This makes sense? if so, what percentage should I give him if I am putting the down payment and applying for the loan and buying the house in my name?

Thanks!

[Cortney Jones]

If it were me, I would feel more comfortable having the house in my name so I fail to see your concern?  Having your money into the deal is a big deal and making sure that you're protected at all points is key.  With the house in your name then you can control things if he doesn't keep up his end of the bargain, and yes, you're right, you can just hire a GC if he flakes out.  This puts you in a positive position with more control and ability to protect your investment.  

Obviously, if you're applying for a loan, youre going to want to run your numbers well and make sure that there is plenty of cushion.  Always plan for worst case scenario, have back up cash for the unexpected and put your agreement with him in writing.  I will do this, you will do that, here is how we will split everything, what costs/expenses will come out and what is considered profit and how will we divide it. 

Your agreement can include you paying him "some amount for his work" but it can be based on the profit from the deal.  That way, as you said, you both have the same vested interest . . . to get the house fixed up and sold as quickly as possible.  He gets paid at the sale closing, just like you do.