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Updated over 7 years ago on . Most recent reply

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Kevin Zhou
  • Flagstaff, AZ
0
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How to structure title in a 50/50 house flip

Kevin Zhou
  • Flagstaff, AZ
Posted

I am a first time investor looking at a property that a realtor and her husband (the general contractor) brought to my attention. They would like me to provide the all the funds (for the property, rehabbing, misc costs) while they will fix and sell the house. After the sale, we plan to split the profit 50/50.

I have agreed to provide it as a loan in the amount that they require, but they want to be added to the title as owners because they want to be able to show they were on the contract for the flip for future deals they wish to pursue. Here is the quote from them:

"I still stand firm that we are included on the title. When we are asked in the future of the evidence of this transaction we must be shown on the closing and then as Sellers.

The Sellers (those on title)are the only parties that would be shown on the settlement statement no matter where or to whom distribution of monies go at closing and this is what we would need for part of our document requirement. "

Since I am new to this, I'm not fully aware of how things are typically structured but have been told by a few others who are more experienced that it seems unwise to have their names on the title when they are literally providing no funding and thus have no risk in the investment. 

I just want to make sure my investment cannot be seized in the case of their financial delinquency since I do not know them well. Is it safe enough to have a lien on the loan while we're all on the title or is there the chance I would lose my investment? Also, do partnerships on flips where one party provides all the funding typically have all parties on the title?

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278
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Jeremy England
  • Contractor
  • Pensacola, FL
142
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278
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Jeremy England
  • Contractor
  • Pensacola, FL
Replied

If I'm providing all the money, I'm not splitting 50/50. 

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