Original owner would have made a lot more profit if they had simply rented and then sold the RE after the outstanding appreciation. 

But can I have some sort of profit from the LLC that I can use to live on right now?  

If the offer of 140K is too low, I was also thinking of adding a stipulation that if I sell the house above 225k, we would split the profit.

For that deal we started an LLC and filed as an S-Corp. 50/50 split for cost and return of profit.

A friend of mine owns a lot and wants me to build a spec home on it to sell and we split the profit 50/50.

Now I don't think all cash out refinances should lead to profit, but I think most of them should.

Our strategy is a 3-5 year flip that when you add up the cash flow, the tax savings from depreciation, the mortgage debt pay down, and the fact that we bought it under market value and that we are selling it on a lease option so we don't need to pay realtor fees and have minimal closing costs, our average total profit over a 3-5 year period is round 60k per property that my partner and I split.  

Cash buying - which is one of the least profitable ways to invest.

To get started I recommend reading @Gino Barbaro book (wheelbarrow-profits).

The only reason I asked is that bringing in partners to the table will dilute the profit margin.