Private money lender wants to partner up. Now what?

[Daniel DeSurra]

I found a great deal recently which attracted the attention of a private money lender whom I know and trust.

She wants to go into a house flipping business with me. She would provide all the money and I would do all the rest including deal finding, managing rehabs etc. She has enough money that we can do multiple deals at once which is attractive to me because I would only be able to do one at a time at this point. We haven’t agreed on a percentage. What do you think? Is it reasonable to ask for more than 50% of the profit? Finding deals in my area requires a lot of marketing and driving for dollars and my time is valuable since I’m currently working and raising a family. Seems like a fantastic opportunity but I would appreciate your advice. Thank you.

[Will Barnard]

Finding the deal, funding the deal, and managing the deal are the three main factors in any deal. I weigh the finding and money as the two heaviest. Based on your info, I think 50/50% is fair here with the understanding that any marketing costs associated with finding the deal are part of the equal expenses and don’t reside with you alone. The fact you can do two at once rather than one on your own and have zero money into the deal is a huge benefit. Asking for more than 50% may make the other side feel less appreciated and thus create problems down the road.

Ask yourself this, if you were loaded and funded 100%, would you want less than 50%?