Profit split in a SFR flip as only a money investor

[Ryan Rogala]

I am considering investing with a friend who actively flips single family homes. He states that he would look for a minimum of $20,000 investment in order to take on a partner. As I am new to the industry and working with him as a partner, I’m looking to come in low at $20k-25k. He is a part time realtor and has all of the connections (contractors, lender, etc.) and would organize the execution of the flip. I’m very handy and am offering to chip in wherever needed to reduce contractor costs alongside him.

What type of profit split would you consider fair in this scenario? (50/50, 30/70, 15/85 etc.).

I’m assuming this is contingent on price of properties. Have not looked into available deals for purchase, but homes in our target market that were recently flipped tend to sell in the $250-300k range.

Before starting to browse this community, I assumed it’d be a ratio of my portion of the purchase price ie. 20k/150k= 13% Since that would be proportional to my share of the cash liability on the flip investment. However, after reading more about how you can flip properties with little to no money down through other borrowing avenues my potential partner may have very little cash tied up in the flip himself. Does that mean I am in a position for a larger percentage?

If I am way off base please tell me. Just figured it was a question worth asking now so I’m not kicking myself when I find out I left money on the table later.