1st Flip Partnership Based Deal Structure Question
Good evening everybody.
I was hoping to get some perspective on a deal structure for my first flip in colorado. I am partnering with another flipper in the town. He brought the deal together, would manage the flip and contractor would do the work. He already has a contractor on board. I am bringing in the cash to buy the property. He will bring in the rehab cost. We will split the profit in half and he will also pay a percentage on the amount of money being borrowed from me.
Since, it's my first deal with him, i am concerned about protecting myself and my money. I had said that I would bring in the cash to purchase the property but the property should be on my name (or our family business LLC or LLC created specifically for this and hold it in that). That way my risk is controlled. He brings in rehab cost and we do the project together. Hoping that he is genuine and the project goes well, we split the profit. Worse case, if it turns out to be a scam, i still have the property on my name so i don't lose anything specifically.
However, he is advocating that he already has that property in an LLC specifically created for this project. I get the deed of the property. He also suggested that I can become a partial owner in his LLC. I understand his view point but want to discuss it with peers here. Do you think this is a good set up for the deal or it can hurt me legally if things go sour? Is this a common practice for such deals? Or I should hold off on this one and wait for another opportunity and protect myself by having my name on the title (own the property) and not just the deed. Is there any other thing i should be careful about concerning the legality of project together?
Thanks for your insights. Please also include your thoughts on getting it reviewed by an attorney.
Best,
Sukreet