Splitting profits 50/50

[Kent Williams]

What are your thoughts on real estate partner program 50/50 deals, with  an investor

[Mason Hickman]

@Kent Williams 50/50 splits are common. Any more details on this one in order to opine in a more meaningful way?

[David M.]

@Kent Williams

We've had many posts on this.  Not sure what are your details, but while many people do it its not really a fair trade if one partner brings the cash and the other is doing the "sweat equity" unless the latter shares in the risk is the short answer.

[David Avery]

50 % of $40,000 is $20,000.

0% of $40,000 is nothing.

Partnerships are needed when someone finds a good deal and can't fund it.   The good deal is worth something also.  Maybe 10-20% .

So determine who is going to do the physical work for so much an hour, my suggestions is about 75% of the going rate.  Who is doing the books, phone calls, marketing, etc at 75% of the going rate.

This way nobody gets to offended with the rates.

Write up everything and sign it.  Maybe have limits , etc included.

Have a real estate broker or attorney review your written agreement.  Every knows an Agent or Attorney

[David M.]

@David Avery

I see.  That's one way to do it.  But, yes, if somebody is doing a "job" then they should get paid for doing a job.  Investors get paid on the final/net profits on their investment, i.e. their cash.  Investors can lose cash.  "Workers" get paid either way..

[Nicole Heasley Beitenman]

50/50 makes sense in plenty of deals and doesn't make sense in plenty of deals. We need more background to know if it does or does not make sense for your situation.

[Evan Polaski]

@Kent Williams, I did them when I used capital partners for flips.  Equity takes half of profit, project management takes half.  The manager does not get paid throughout deal.

In my case, as project manager, I sourced the deal, came up with work scope, hired contractors, did basic bookkeeping, listed deal, everything.  I did not get paid for these services, I didn't take a commission on finding deal.  So if broke even or lost money, I did a lot of work and did not make a dime.

[Bob Shome]

I'm doing a rehab flip right now. I was presented the deal as both the funder and because I've done these before. We are hiring out a lot of the work but are both doing a fair amount as well. We agreed to a hourly rate for the work we each put in. We agreed that my partner would essentially get a finders fee on part of the profits and then we'd split the profits 50/50 after that. In our deal he's getting 70% of the first $100K in profit and 50/50 after that. In hind sight I think that was too generous and should be more like 60/40 or even a set fee. This is an unusually profitable deal though. We stand to make about $275K in total. We will have about $150K into it and it will sell for about $425K. The profit potential was so much I really wanted to make it work so that's why I basically agreed to a $40K finders fee. These folks agreed to finance the property for a year so we are only out a $10K down payment and our $40K rehab costs. We will likely never find another deal like this again. 

[Will Barnard]

Quote from @Kent Williams:

What are your thoughts on real estate partner program 50/50 deals, with  an investor

As others have stated, not enough info to make a meaningful reply here. 50% deal splits are common when both parties put up 50% of the capital or split the duties 50%.

Money, sourcing the deal, managing the rehab, managing the resale, and managing the finances are all part of a deal (labor on rehab could also apply if you do any work yourselves instead of hire it all out).