Partnering with a Contractor

[Alf Holst]

I have had a construction crew work on 2 of my properties. The project manager and I have similar interests in flipping and/or rehabbing rentals.

I like the level of professionalism from him and his crew of about 5-8 people.

I want to do my first flip and partner with his company. I would just be able to bring the financing side to the partnership. He would bring in the work to flip the property to sell or rent.

We are both willing to invest a maximum of $50k each on a deal.

How would you split up the profit from a flip in a situation like this? Straight up 50\50? Or something else? Who should get the larger cut of the profit? The financier? Or the one doing the work in rehabbing the project?

[Greg Dickerson]

@Alf Holst its better to just hire the contractor if you can. Theres no reason to partner if you are bringing the deals and the capital. If he is bringing cash as well thats a different story. 

Lets say you both put up the same amount of cash and he gets paid normal rates to do the work then you could do a 50/50 split. Thats the simplest way to do it. You're just hiring his company as the contractor for the JV.

Make sure to have an attorney structure the paperwork for you so everything is in writing before you start.