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Rehabbing & House Flipping

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Lucas Pfaff
  • Realtor/Investor
  • Philadelphia, PA
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114
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What is STANDARD? Partnership Structure & Agreement for Fix & Flip

Lucas Pfaff
  • Realtor/Investor
  • Philadelphia, PA
Posted Mar 8 2015, 17:53

I'm trying to source any articles, blog posts, etc that discuss the standard options for the formation of partnerships. While I'm generally familiar with the options, I am trying to share this information with friends of mine (a couple although they could just as easily be friends as it shouldn't effect the agreement) who are a bit hesitant. Basically, they are looking to structure a partnership between the two of them to fix and flip properties but are unclear what is generally considered "fair". 

One individual is a GC without capital. The other is a RE agent with capital. There roles would be roughly the following:

Individual #1 (the Agent) - Identifies target properties, closes on chosen property, funds the acquisition, funds the rehab, sells the property.

Individual #2 (the GC) - Analyzes target properties, estimates rehab costs/time-frames, GC's the rehab.

Neither individual would not be paid for their respective services, i.e. GC's labor would not charge for his time and the agent would not charge her commission. The GC would need to charge for the time of his employees.

I see no reason this shouldn't be a 50/50 profit split. Does the community agree? If not, I'd love to hear why and what would be more fair. 

Either way, as I mentioned at the top, I'm looking to find several resources to direct them toward so they can be comfortable with the agreement. Forum posts are insufficient...they would like to see articles/blog posts/documents.

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