Joint Venture Arrangment for Flips

[Brittani Gardner]

Any advice on this arrangement:

My new partner is a house flipper. I am interested in providing some capital but not all. He has a relationship established with a local lender already. We have a couple deals that we'd like to purchase, flip and split profits 50/50. I put up the down payment and cover holding costs with a second mortgage on the property. He buys the property in his company's name, takes out the first mortgage in his name, manages the project from start to sold and we split proceeds after holding costs and loans are paid off. We also have a JV agreement in place to provide full explanation of the plans, addressing death, taking loss on the property, who does what, etc.

My biggest concern is protecting the profit to be made. The second mortgage would protect my original investment, but would the JV agreement be enough to protect my profit?

Is this the best way to go into business together given our plans with using traditional bank financing to fund most of the project?