Avoid other cooks in the kitchen and make it clear you are the operator/developer of the deal with all decision making power. Get your conventional or private or hard money rehab loan financing in place, and then secure your friends' debt in second position behind that. You are essentially using their money as "Gap Financing" to cover whatever it is you lack -- down payment, debt service for the rehab loan, extra cushion for rehab itself, etcetera. Offer your friends a fair return for their money, which should most likely be pref interest + profit participation. Those amounts are up to you, and the "pref" should be deferred, so it will also be paid when you sell the project, just like the profit participation portion.
To reiterate...strongly suggest not bringing them on as "partners" with any decision making power. You will be tempted to form an LLC or other entity (perhaps a trust), and include them in the paperwork. Don't. This can work well for larger Multi Family syndicates in need of Limited Partnership status, but should be avoided for SFH flip venture. SFH flips are relatively simple, so do your best to keep it that way and keep all the control while also offering your friends a fair percentage of the profits.
And in case you are wondering why "pref interest?" It's because they are lending you money, and if this deal doesn't generate the windfall you expect, well at least they get a minimum pref that shouldn't change, which they deserve as risk taking lenders on your project.
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