Profit split for a flip with 4 investors

[Gerard Johnson]

Me and group of friends who want to get into learning how to flip wanted to partner in a residential foreclosure deal. Not sure how to determine profit split since the roles of each person is different. Investor A and Investor E is doing all the work and paying for the rehab costs. Investor E has the bulk of flip knowledge and experience. What is the proper way to split? I was thinking a 70/20 in which Investor A gets a return on the profit of 40%, Investor E gets a return of 37%, Investor B and C gets 8% ea return on profit, and Investor D gets 7%. 

See info below:

Property cost 152351.16

Investor A 55000

Investor B 20000

Investor C 20000

Investor D 15000

Investor E 32351.16

Please advise what you think is the best way to split profit equitable?

[Will Barnard]

5 partners, all with active ownership can spell trouble. That is potentially 5 chiefs and no Indians. If some of the partners are just money partners, then forming the proper legal entity (see your accountant, tax advisor) and having one or two "managing partners" with the others as limited partners could help.

As for profit splits, the money only investors should (in this case) just get a straight return on their money (at least in my opinion) as you do not have a whole lot of profit in a deal like this to go 5 ways. Perhaps have one or two money partners step up the investment and eliminate a partner or two. 5 partners is more feasible for a $1M deal.