partnership deal how to structure

[Mark Cerminaro]

Hi, I am thinking about taking a partner on my single family flip which I am closing in a few weeks.

I would be doing everything on flip, purchase, rehab and selling. The only thing the partner will bring is the down money which is 20k and possibly the 1st phase of rehab which is 10k.  

I am under contract and set to close on 2 other properties which are multifamily apartments which I plan to hold, but they also require 20% down. So my cash on hand is cutting it close to do all 3 would leave me with very little reserve.

Question is what would be a fair split for partner? I was thinking around 15% interest and a % of the profits when home sells maybe between 10%-20%  . projected profit on flip is $42,000. They would get the 15% interest on money, at worst case if I just refi the single and rent it. If anyone has done any deals like this please let me know, how it was structured.  Thanks

[Mark Fedorov]

There is no set structure for a partnership deal, I have found, as @David Krulac said, it is always best to go on your own, have the money come from a lender. However if you want to get your feet wet, the ideal partnership deal is one that you would accept the other side of.

Would you put $30K into this project to get 15% of the profits, if someone else did the job? if yes, then it is fair. Just remember if you write up doc to cement the partership, EXPLICITLY spell out how the partnership will break up, spending time now, when the deal is good, mapping out what will happen when the deal is bad, will save you much time and headache.