Flipping Profit Split

[Nick Parks]

Hi all,

I am going to buy a house to flip and be the one to manage the project. I will line up contractors, get bids, schedule, do small items myself and what not. I have a person who wants to lend the money for a down payment on hard money and rehab cost. If I am the deal guy, and he is the money guy, does he pay the monthly interest payments? We will be splitting the profit 50/50. I would like to hear what others have done. Thanks in advance.

[Rebecca Raskind]

I have a money partner and we structure deals exactly this way. On our first deal together I had skin in the game as well (paid about 1/3 of the renovation expenses) but she handled the down, about 3/4 of construction costs all the loan interest payments.  The deal went very well and we are doing more deals together now where she will be 100% of the money. The split is still 50/50 but she is more or less hands off during the process. We keep detailed spreadsheets of expenses with receipts. We do have an agreement that details this arrangement where of course after closing (we split closing costs), all monies spent go back to the partner who spent and the remainder of the profit are split in half. 

It’s helpful that I’ve known this partner for over 10 years so we are entering the arrangement with a history of trust.