Profit sharing on a Flip

[Bryan Sanchez]

Hello, I have been flipping homes with my LLC for the last 2 years. I became overwhelmed with the amount of work. I was flipping 3-4 houses at a time and I would do acquisition, I would mange rehab with my workers, and then I would list as im a Realtor, and will sell or get cash out refinance. I told my friend Jose and brother Josh to join me and work with me. Jose started taking acquisitions, cold calling etc. Weeks later we found and deal and I negotiated and closed on it. My brother Josh took care of materials ordering. After that I took care of the entire rehab, managing workers, paying bills, and listing and getting under contract.

We dont have a split structure on this deal we just finished. It is around a $35,000 net profit. What would be a reasonable split for everyone?? I dont want to burn myself or my friend and brother.  

[Brian Cauldwell]

If you plan on doing more of these with your partners, I would plan on getting that structure set up before your next project. Percentage based and not dollar amount. As that may not have been discussed before the project started, it is going to be tricker now that a real dollar amount is set. 

I do not know you or your partners, so how you should split the money is entirely up to you and them. Just make sure next time that is discussed prior to the next project. I would also talk to them about what would happen if a project ended up losing you money, or if one of you wanted to hold the property as a rental.