Advise on how to determine the percentage of profit
This is my first post on Bigger Pockets. A friend of mine, who has done few flips, and I have had some preliminary discussions on helping him with funding of his next flip.
I am thinking that what I am expecting as return on my investment would be at the very least to get my money back and a percentage of the profits from the sale. I am struggling to come up with a formula or approach that would determine what percentage of the profit would make sense and would be fair to both of us. My initial thought was that the percentage should represent the ratio of how much I am contributing to the down payment. Also note that on these deals I am doing nothing other than contributing cash, no search, no management, no marketing, etc. Appreciate any and all advise. Thanks.