Case Study for Newbies:

Re posting because I posted in the wrong place

here is a case study of a partnership exit strategy

Two people going into a partnership. What if the house doesn't sell in 12 months this is how they will dissolve the asset. its a 50/50 partnership with partner abc  earning equity from managing the rehab. partner xyz is earning equity from bring the financing. the property will be help with xyz partner because they are bring the financing and holding all the risk


XYZ is borrowing private money

Exit Strategy
If at any point abc partner and xyz disagree on
decisions/strategy, either abc can buy the property or the
property will be kept by xyz. The property will be
sold to the highest bidder between abc or xyz

Any profits/expenses (such as closing costs) will be shared
between the two parties.

 Here is an example scenario: Total cost so far (purchase price + repairs + interest paid to xyz + insurance etc):

$60k xyz bids $70k
abc bids $80k
abc will be allowed to purchase the property.
Profit: $80k-$60k=$20k
Transfer and recordation costs : $2k
Net profit: $18k
abc and xyz each get $9k

your thoughts on this is note abc is bring the deal and assigning it to xyz. xyz is funding it and holding it in a llc where xyz is the only managing partner.

YOUR THOUGHTS AND WHAT DO YOU SEE IN THIS CASE STUDY