Partnering in a flip with multiple people in Bay Area

[Jan H.]

I would appreciate any insight or advice any experienced flipper can give me on this.

My mortgage broker friend called me today with a potential opportunity to get in on a flip. 

Property is in Berkeley Hills, two story with the bottom part of the house if not a permitted conversion.

It's currently a 2/1.5, Purchase price is $1M, est. rehab is $250-$300k, ARV is $1.6M. Part of the play is to legalize the bottom part of the house, adding one bed + 1 bath hence increasing sqf. He is raising enough money to buy the property for cash and rehab it.

I do not have the full details yet but wanted to get some insight how these deals are done as there will be multiple cash investors in it.

He wants $150k in the deal from me for 3 months for a 10% return. After the 3rd month, the plan is to refi the house with private money (?) and pay me back. I have never heard of doing this and not sure if this is something that can be done? The project would take 6-8 months to finish I'm thinking.

What struck me was that this could be purchased with PM for a 10-12% annual rate instead of paying someone 10% for 3 months? 

I do not have millions yet and $150k is a lot of cash so want to understand my exposure which seems great. I will get some more info tomorrow but wanted to see if anyone can point me how these deals are usually done?
Thanks!

[Account Closed]

Berekely is full of old houses sitting on great lots that would be very good flips. I see them all over the hills. However, every single project house that I have seen sold takes years and years to finish and sometimes goes through multiple owners before the project is even completed. Also Ive heard from experienced flippers that they stay away from berkeley because the permit process is so cumbersome and slow. As a resident it really pisses me off because Id rather have houses fixed up and sold which would increase the value for all the other homes around. The house next to ours is uninhabitable and is now on its third owner who is trying to fix it up. I see construction in fits and starts but its been months and hardly anything has happened. So in short, berkeley flips are difficult.