Investing with a partner, need advice.
I am purchasing a property to flip with a partner. Need advice on what kind of paperwork I need to indicate the percentage of ownership and the percentage of profit split. Can it be written in the purchase agreement during escrow or is it a separate contract written by a lawyer. Also how do we let escrow know that when we sell the house. I want to make sure that in case something were to happen to me my wife has the legal documents to back our agreement so she gets the money back Here are the terms:
Purchase price $610K
Estimated rehab and expenses $150K
Loan interest expenses $45K
Closing cost expenses $55K
Selling Price $990K
Profit $130k
The agreement is my partner puts $250K down, and I put $200K down and we borrow $310K.
The agreement is I'll manage the complete project and get 68% of any profit and he will get 32%. We both have the same risk in terms of our investment. As far as ownership since he is puting down $250K (55.5555%) and I am putting down $200K (44.4444%). I think the ownership should be accordingly to our investment. So worst case scenario if the house sells under cost we get our investment percentages after paying the first lien.
There will be other terms on our contract like need to open a bank account with both signers, plus a credit card, etc.
Again I need help in determining if we need only a legal contract or if there is a way that the percentages of ownership and profit split can be on the ownership records (title) when we buy and sell the house. in addition to determining if we can do this with out forming an LLC.
Thanks!