leveraging risk in a flip partnership

[Jon Christian]

HI All. Great reads on this website. I've learned alot about investing in Real Estate in the two hours I've thus spent on here.

So... I've come across a house that needs rehab that I intend to flip. I am using hard cash to buy the house and a loan to finance the rehab. I came across a man who seems to know his stuff in terms of construction and wants to potentially partner up on this fix and flip job. The basic scenario is I finance the project and he does the work - subcontracting out jobs when necessary. He mentioned a 50/50 split in the profits would be the take away. 

At this point, you are probably wondering why I wouldn't just hire out the work if he wants 50 percent. It doesn't take a genius to know that a 50/50 split of the profits is clearly in his benefit considering he has no financial risk in the project, other than time, since he is not financing any of it. If he is as good as he says he is, the projected cost of rehab could be half of hiring the work out though which makes the proposition intriguing. Key word is could. Also, I would have a great partner for future investments if he is as good as he claims to be. There are alot of risks on my part, like if he can stick to the budget, finish on time, do everything that needs to be done, be dependable, etc. He has proven that he knows his stuff at the very least.

Anyway, I'm trying to come up with a fair scenario that would work for both of us - one in which would leverage the risk involved for both parties. Perhaps I hire him out and pay a bonus at the end? Perhaps I buy the house, he fronts cost for material and we do split profits? There are a few scenarios swimming in my head but wanted to get input from others that may have been in this situation. Thanks for any advice!