Need advice on structuring a deal

[Michael Evans]

Hello BP,

Need advice on structuring a deal. So the back story, I found an 8 unit building in a great area. The previously owners purchased it for 165K and selling for 290K. The previous owners under estimated the rehab and ran out of money the property is completely gutted to the studs and has been sitting for a year. Built in 1884 and located in a historic district, this will be a lot of work, from plumbing to updating electrical to changing the entire floor plan. I’m completely new to flipping and understand the importance and value of partnerships I’d rather be a part of a deal than no deal. I’m more of a buy and hold guy I own 6 rental units (duplex and 4plex). I wanted this 8 unit for my rental portfolio, talking to an experienced flipper (15 Yrs.) he wants to partner with me on the deal. He suggested he fix it up and flip it to me, I purchase it with a bank loan and add it to my rental portfolio. I don’t want to be taken advantage of, don’t know if this benefits me; the property will be worth 600K low end to 800K high end when done. We are about to get it under contract for 250K, they pay closing cost and leave all purchased material in the property(roughly 10K worth). The Flipper suggested 12 months and 200K reno budget (estimate) converting the building into a 4 unit luxury apartment building or condos 1500sqft each. Rents support $1200 to $1600. He suggest the contract in his company name, I put down $5k Ernest money, we use a hard money lender or private money which he can get. I bring 40K to the deal and he brings the lender in his company’s name because he has a reputation with them already.

My question is how would you recommend structuring a 50/50 deal like this?

How can I protect my interest in this deal if everything is in his name, maybe I’m missing something.

How would I profit from the flipping side and cash out while still using it as a rental property?

If I purchase the property from him with a bank loan, how do I get my cut from the flip profit, I don’t want my cut tied up in equity?

Thanks BP any advice would be greatly appreciated!