How to calculate “sweat equity” in a partnership?

[Morgan Christopher]

I have a business partner who is located in another state. We are just starting to work together, looking for properties to BRRRR in my area (WNY). We are planning on splitting all costs 50/50 for properties and renovations. However, I will be the one renovating the properties here. Do you have any recommendations on how we could fairly incorporate my sweat equity into the partnership?

[Chris Seveney]

@Morgan Christopher

This is always a challenge. Because sweat equity comes in many forms such as physical work on the property, finding tenants, collecting rents, doing taxes, finding the actual property...

This is one of the hardest things to agree on and when costs increase and money is not being made it leads to a lot of conflict. Not saying it cannot be done but it is very difficult to determine

One scenario is get quotes for work and agree that you will do the work for 20% less etc.