Too good to be true

[Cameron Kline]

I had a meeting with an agent/investor I’ve known from my kids school and he had an interesting proposal but I wanted to see what others thought. He has done flips and has been successful with them and has sold a lot of houses. He was talking about doing a 50/50 split on an upcoming flip but what he’s proposing seemed a little strange. Instead of us both putting money in up front together I would put up the money down, and cover the renovation cost, and carrying costs. He would find the property, do the renovation, all the heavy lifting on that side of things. He has contractors he’s worked with already. We would have a contract that says we split profit 50/50 but if there is a loss then he would take the loss and pay me my initial money back. We’d also be using a hard money lender for the flip. Should I insist he put skin in the game up front as well and we both take our chances on losing money? Steer clear completely? 

[Rick Pozos]

It sounds like he is trying to do too many projects and does not have any money to get another one going. 

I am kinda on the other Side of things here. I AM the rehabber. BUT I would NOT give 50/50, maybe my lender gets 25% of the profits for lending the money and SOME carrying costs. Finding a REAL DEAL is #1 biggest issue. Then dealing with contractors is full of headaches. Lots of moving parts that most new people cannot handle effectively.

But I am not giving up 50% of profit. Something sounds a little fishy. I would rather just borrow at a little higher interest rate and keep all the profit for myself.