I would provide the funding for the rehab and we would split the profits once sold.

A little bit of background about ourselves: we both work regular jobs and have a very regular middle class incomes hence we thought partnering up is a good idea to bring in the initial investment and also w.r.t dividing up the profits and sharing the losses if any that we encounter.

My question is: Is this a deal worth pursuing despite the back taxes?  

I’m interested in understanding how to profit from a situation like this. 

And ALWAYS follow up.Here are the numbers on the deal:- $108,000 Purchase price- $8400 closing costs- $70,000 Rehab Costs- $2,000 holding costs for two months (estimate is 5 weeks to completion but lets say two months, it wouldn't be so quick but equity partner is full-time GC on-site)- $274,900 ARV (Appraisal completed by bank)- $5,498 Selling Costs- $16,494 RE Commissions.Net Profit = $64,508 about 23.5% profit off of ARV.Now the fun part begins, I'll report back with pictures as we go through this.

However, if this is simply a case of spending a little less on personal lifestyle choices now during a cash poor period while you complete a couple of rehabs, I say absorb the lifestyle pain now and enjoy the profits down the line. 

Please understand that I'm perfectly willing to give back some of my profit by paying for such a service if I already had the property under contract with a good chance of closing, but again, the problem here seems to be in the order of the events -- you need the repair estimate before you can put it under contract.

You might have to give up part of any profit but it is better to have part of something than nothing. 

My advice to my daughter and son-in-law as they did not want multi-family, either, and wanted to buy a home to live in,  not just investment property, was to buy something that needs some work, plan to fix it up within the 2-year tax-credit time period, sell and keep profits tax-free, then buy another one that needs work and repeat until children need a solid school district.   

Also, do I need to pay tax on the entire sale price, or just on profits?