Joint Venture with Contractor?

[Ben C.]

I’ve worked with my GC on several deals and he has approached me about wanting to work together.

Essentially it would work something like this…

1) My LLC purchases the property

2) He will only charge me COST on the labor and materials (no profit or markups) which will save me around 30% on regular contract figure he gives me in my market which is very expensive

3) He will also make 300k of his own liquidity available to inject into the deal (I will put some of my own cash in and get a HML loan for the rest). Projects can require up to around $1M in capital as we are in high end market.

4) After sale of property my LLC will pay his LLC his portion of the profit

5) he manages the entire construction project.

I’m thinking of a 50/50 profit split based on the above.

What do you all think about the above and what is a fair profit split?