I know this may not be the answer most people agree with but...If ultimately only YOU are putting money in the deal and your 'partner' has no skin in the game, in the sense of MONEY/RISK.. then you shouldn't split profits at all.You should PAY HIM for handling the rehab.

Obviously this will reduce my holding costs and interest carry, but has several potential negative outcomes and risks.

I'm in discussions in setting up a potential partnership with an investment group where we'll pay a 8% pref to the investors, but that would be the max risk I would be willing to take.  

@Tom Gimer or more specifically should carry around contracts in my car for the off chance of this happening again and get the owner to sign my contract.

Make sure you know where you are at risks, and do your due-diligence to control those risks. 

 O institutional loan “allows” a sub2, but yes it is done every day.....with risks.

That's because I'm very risk adverse.I learned that everything is a business cycle.

That risk means that they are going to charge you for it.

She is risk adverse (but smart, a great saver & frugal) so we played Let’s Make a Deal.

My options are Make offer stipulation I can get financingWait and hope it doesn't sell and remake 40k offer with owner financingObtain private loan (already tried family and friends, all too risk averse and uneducated) make low cash offerFriend of a friend put me in touch with some bigwig hard money lender with a legit company.