Split or Split with Points on a Flip?

[Michael Sears]

Hi BP,

I found a house that will make a great flip and I have it under contract. I do not have the funds to finance the deal, so I have an experienced flipper who wants to partner with me. The total profit on the flip could be around $80-$100k. I would like to have your feedback on the terms and let me know what you think. 

The investor is willing to partner 50/50 with me on the profit... and wants me to pay 9% on half of the money ($170k is my half). Why would an investor want to do it this way as opposed to just doing a different split, like 45/55 or 60/40 with no percentage? It just seems less complicated, but I am not a mathematician. 

The investor has the crew he is accustomed to dealing with and has flipped a ton of houses, so he knows what he is doing. I have only flipped one house several years ago and I do not have a crew. I will be at the house every day, though, making sure things are getting done, as well as finding the best pricing on materials. And, of course, I found the deal. 

The investor does not want to get an inspection and just wants his contractor to look at it during our due diligence period. Since I will now be responsible for $170k, I don't know if I am comfortable not having a legit inspection. What do you guys think?

Thanks!