Structuring a Partnership - Advice Needed

[Dan Buhr]

My first house is under contract with the plan to fix and flip. I am the primary money investor, deal finder, deal analyser but also have a secondary money investor. We also have a construction manager who will be providing GC services free of charge for the actual rehab part of the job (our monetary investment to fund all construction costs, he will be providing general labor and management). So, I’m trying to come up with an equitable way to set up the partnership. My thought is to give the CM a set % off total profit and then primary and secondary investors get % of remaining profit based on total invested. For instance, a rudimentary example:

Total $$ Invested: $100,000

Primary Investment: $80,000

Secondary Investment: $20,000

Total Profit: $20,000

CM @ 10% Fee off top = $2,000

Remaining Profit: $18,000

Primary Investor @ 80% of remaining profit = $14,400

Secondary Investor @ 20% of remaining profit = $3,600

My only thought is that I, as the primary investor, have put in a ton of time finding the deal and financing it in my name. Do I take an extra percentage for that work or is that looked as being greedy/selfish? I want everyone to make money and desire to work with me again. Thoughts? How has the community structured similar deals?