Legal/Entity Structure Fix and Flip w/EquityInvestor

[Jake Silcott]

I searched the site for an answer on this and found some conflicting info. Looking for a little clarification.

My business partner and I will be working with a new equity investor who will fund the purchase and rehab of flip projects for a percentage of the profits when we sell. We have the deal terms worked out. I'm trying to determine the best way to structure the arrangement from a legal/entity perspective. 

It seems like the 2 best options are...

1) Option 1: We form an LLC with our investor. When we purchase a property she wires funds directly to the title co. Deed of trust in her name. Promissory note between the LLC and our investor. When we sell she is paid back and profits go to LLC. Does this sound like an effective strategy? How should the fix up funds be handled? Should they be deposited into the LLC bank account and secured by a separate note? What other way could/should the rehab funds be handled?

2) Option 2: We form a JV between our existing LLC and the investor. What would be the benefits or drawbacks to this approach?

3) Option 3?

Thanks for taking the time to read and reply.

[Steven Hamilton II]

They place a lien, you issue a 1099 for their share of profits.  Partnerships can be a nightmare. Keep it simple unless it is ongoing.