Partnership BRRRR Deal

[Harry Pederson]

Looking for advice on BRRRR with a partner where down payment (including rehab budget) will be paid by investor and we will provide remainder of financing, perform rehab and subsequently property management.

Likely won't be able to BRRRR out all of the money invested, so some will be tied up in the property on final refi.

Was thinking along the lines of 50/50 split of profits vs equity (not sure how to do equity if we finance out and then just split the cash out?) and a 10% pay back to investor until they are paid out the full amount of their initial investment if the ARV/Cash Out is not enough. Does this make sense?

In the example below: 
100K property (20% down payment) = 20K.  

Reno = 25K

Holding, closing, other costs = 10K

Total initial investment: 20K + 25K + 10K = 55K

ARV = 150K (finance LTV 75%) = 105K cash out

Property rented for $800/mo.

We will be managing for 7% fee.

On the refinancing out: who gets what?  

Profit split:  105K (cash out) - 55K (initial investment back to investor) = 50K split between the two partners = 25K each partner

Equity split: 105K (cash out) split between two partners = 52.5K each partner which would mean investor is in the hole 2.5K.

Thoughts?  I think looking through the forums, the profit split is the usual setup right?