Splitting profits of sale

[Phillip Seibel]

Hi everyone!! Buying our first investment property. My son is buying the property in his name and using his money to pay closing costs and down payment. My fiancé and I found the property, negotiated the contract, and wrote all the contracts. When we go to sell the property how should we split the profits? My fiancé thinks it should be 1/3 1/3 1/3 and I think it should be son-50% and us 50%. Which way would you guys recommend?

[Nicholas L.]

@Phillip Seibel

why would you sell?

[Jared Hottle]

It depends on how much you want to help your son out. I think you all should sit down and talk about it but if I was in your shoes I would probably let my son keep all the profits or take something similar to a "wholesale" at closing or refinance like 10-15k. 

[Zackary C Dunn]

Personally, after doing something similar with a friend, I would use a LLC Operating agreement to outline each individual's role, their payout, and penalties for non performance.

I'm assuming it's a flip. If so, who is doing the labor and who is paying for materials?

My opinion is if your son is on the hook for everything financially, I would say he should be at least 75%. If the deal crashes he is the one on the hook. If you and your fiancé are doing all the labor and have some skin in the game you should be 50/50

[Phillip Seibel]

Quote from @Zackary C Dunn:

Personally, after doing something similar with a friend, I would use a LLC Operating agreement to outline each individual's role, their payout, and penalties for non performance.

I'm assuming it's a flip. If so, who is doing the labor and who is paying for materials?

My opinion is if your son is on the hook for everything financially, I would say he should be at least 75%. If the deal crashes he is the one on the hook. If you and your fiancé are doing all the labor and have some skin in the game you should be 50/50

 Thank you so much for the response. Yes we all have a role in it but when it comes to my kids I tend to do more in their favor and I want to make sure I’m being fair to my fiancé as well. 

[Phillip Seibel]

Quote from @Jared Hottle:

It depends on how much you want to help your son out. I think you all should sit down and talk about it but if I was in your shoes I would probably let my son keep all the profits or take something similar to a "wholesale" at closing or refinance like 10-15k. 

Thank you so much for the response. Yes we all have a role in it but when it comes to my kids I tend to do more in their favor and I want to make sure I’m being fair to my fiancé as well.