I would like advice on what be the best way to get this done. I have a very good friend who lives in a different state. He is willing to put up the money to purchase and fix up property. He wants 6.5% on his money which will come from the profits and we split the remaining 50/50. What would be the best way to structure the arrangement? I have a RE brokers license here in Florida. So I don't know if that helps or hinders me. I have a some cash for the deal.
What about either interest or split the profits but not both? Just a thought. If you are bringing some of the money and doing the work, it seems like you are getting a little less than your share. And you are the broker. If it is a way to get a foot in the door then I am all for it but maybe moving forward you can tweak the terms when you have a track record to prove yourself. Just my two cents.
I have even heard of people giving a straight return of a percentage (say 12 percent) but move to a 50 percent split if more profitable for the lender.
I have only borrowed money on deals like this (never structured a split of profits) but the note was drafted by a lawyer at my title company. It was pretty easy on my part. Not sure if that helps.
So if I do a 50/50 split do I do it as a partnership or some kind of joint venture? What kind of entity is best? I have experience doing flips. Just out of the business for 7 years.
Wish I could help you with that. I'm sure someone will read this who has done one and will chime in.
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