How would you design a partnership?

[Benjamin Bleasdale]

Hello, I want to get into flipping with a friend and creating a partnership. We’re still trying to iron out as many details as possible before getting into the partnership. 

We both we will bring cash and purchasing the flip in cash. We both do construction and will be doing much of the construction. 

I had thought that a good way to divide the profits might be:

50/50 partnership 

The construction that each of us inputs would have a monetary value dependent on time. 

The money each of us input would be calculated essentially as we were our own private money lenders. 

Has anyone else made a partnership for flipping and what do you do?

[Nicholas Lohr]

In the event a partner wants out it works in this order...

1. Since I am the sponsor I get right of first refusal to buy out the departing member's interest. 

2.  If I decline then the choice goes other partners as to if they want to buy out the departing member's interest. (it goes in order of who has the highest equity to who has the lowest)

3.  If no other members want to buy then it goes back to me to find an outside party to buy out the departing member's share.

4. If I can't fine someone then it goes to the remaining partners to find an outside party to buy the share. (again in order of who has the most equity)

5.  If they can't find anyone then the departing member has an option to find a buyer but the buyer must be approved by the members who are staying in.

6. And finally if none of that works then we have to sell. 

We choose a timeline of 45 days for each step. 

Price to be determined by a mutually approved appraiser.