My buddy just approached me with an offer to invest with him in buying foreclosures, he is a GC and he has done house flipping before, he wants me to invest 30K-50K of my own money and use it to get a 6 month rehab loan from a hard money lender at a little over 11% interest, after the House was finished we would split 50/50, he would also add me to his LLC that we would use for that future buy, the reason I’m thinking about investing Is bc I own my own business which will bring 200K this year in gross profits, the down side of my business is that I work 12 hour a day 5 days a week, and I feel that I’m slowly burning out.

They have decided to take a percentage of the profits instead of a percent return of money invested.

@Scott Freer, if it was you who arranged for those figures to arrive at exactly $50k profit (less tax), based on realistic rehab and ARV figures that you carefully researched, to arrive at your maximum allowable offer (MAO), fine.But if those figures were presented to you by the Seller (or agent), not so fine!

I'll be living in one unit and rent out the other to make a nice $250 profit as well as no rent needing to be paid on my end. 

In my case 1031 exchange failed so the mortgage I was carrying on the relinquished property according to my CPA is causing capital gains tax in 2017 and then remaining profit that came out from the 1031 intermediary account will be taxed in 2018 tax year.

Is there some expense line you left off or was your net profit actually 18,200?

As soon as your go to 1.5x or 2x that type of property, it takes longer to sell and the sales commissions take a bigger portion of your profit on each deal.  

As long as the analysis makes sense, it is always good to leverage your funds to do more or larger deals. 

I know I can rent it for 2+ times my mortgage but I also stand to make good profit if I sell, which is why I want to have a conversation with the right legal professionals to help make a good decision. 

I would think that a small negative cash flow margin would be acceptable due to the much larger equity gains you are receiving (compared to a 100k property that has good positive cash flow).I would love to know your thoughts.