How to split profits in a house flip between partners

4 Replies

A friend and I are flipping two houses. 100% of the funds for both purchase (paid cash, no mortgage) and the labor and materials are mine. I pay for the staging furniture. The bulk of the labor is done by subs, however we also contribute, make all the style decisions, running around, landscape design etc. The car, truck, etc that we use are mine. What is a fair formula?  We'd like to continue to do one or two houses at a time. 

If you're footing all the bills -purchase, reno and staging- (presumably also carrying costs) what's the "partner" contributing other than their time for errands and design advice?  

@Margie Brooke Just use investment percentage as a basis for profit sharing. Table all your costs and all your friends cost, sum all to determine total costs and use each individual cost to determine each persons investment percentage. Use the percentage to determine each persons share of the profit.

@Margie Brooke a normal split is 50/50 when one brings all the money and the other does all the GC work. The money is a silent no-show partner. If you're doing all of the money side and splitting the GC side, to me that is a 75/25 split. It sucks on their end but it is what it is because really, you don't need them if you have the same skills. The only time that would change is if the money person puts in the same work hours but the skill levels are drastically different and they are just general labor, then the math gets more fuzzy and it could go anywhere between 51/49 to 74/26 depending on the skill gap