Secondly I think there may have been some misunderstanding as to what I was asking.  

Lastly, I think I had a horrible misunderstanding of this all. 

@lokesh I may be misunderstanding the first part of your comment, but if the owner is asking for $20k over value....what exactly are you trying to work here?

Or am I confused and misunderstanding this point?

It also makes sense to clarify with whom you are speaking the actual definition in the context to insure no misunderstanding or misinterpretations.I essentially knew what it meant but as John pointed out sometimes it is used interchangeable hence the confusion.

Unless I am misunderstanding, you appear to me combining both in your conversation.I avoid dealing with cities and permits on rehabs when possible, costs to build vs. buying existing often do not make sense in this market of CA.

Okay, just to clear up some common misunderstandings.  

J Scott Funny, I redid my estimation (I had a misunderstanding with my last estimate) and it came to a total of $49,661.71!

@K.Marie Poe I did misunderstand you.

If you know what he is bringing to the table is equal to 50% of the profits, and think it's a good deal, then the only issue it would seem would be the exit strategy, which I believe everyone is in agreement should be decided upon going in, and I'd detail it in writing, to avoid any misunderstandings.