Alpharetta, GA · Member since 2018 · 14 posts · 2 votes
What should be a standard agreement between 2 partners- one that bring the money and the other in charge of finding the deal and manage the project ? I have a friend who partner with a project manager with flipping experience, and my friends takes all the risks , responsible of all the expenses and get 2/3 of the profits while the project manager responsible of finding the deal, manage the renovation and sell it. does that and get 1/3 of the profits but have no expenses or any responsibility on loses..
Does that sounds fair to you?
Is anyone can please share of such an agreement between partners for flipping project?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
6y
There are a million ways to do it, and it boils down to what both sides agree on.
That said, I'm a fan of 50% to the money and 50% to the time/effort. So, if one person is bringing 100% of the money and the other is bringing 100% of the time/effort, then 50/50 isn't unreasonable.
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y
Not sure if my view is the majority or minority view but as a general rule I believe that cash = equity. Folks who provide services (management, finders) should be paid a fee and not equity unless we are talking about an incentive slice (like 5%).
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
6y
There are a million ways to do it, and it boils down to what both sides agree on.
That said, I'm a fan of 50% to the money and 50% to the time/effort. So, if one person is bringing 100% of the money and the other is bringing 100% of the time/effort, then 50/50 isn't unreasonable.
What should be a standard agreement between 2 partners- one that bring the money and the other in charge of finding the deal and manage the project ? I have a friend who partner with a project manager with flipping experience, and my friends takes all the risks , responsible of all the expenses and get 2/3 of the profits while the project manager responsible of finding the deal, manage the renovation and sell it. does that and get 1/3 of the profits but have no expenses or any responsibility on loses..
Does that sounds fair to you?
Is anyone can please share of such an agreement between partners for flipping project?
Thank you !
Maayan
I agree @J Scott just make sure you meet with an attorney and put your partnership agreement in writing and create all the proper security instruments to protect the investor and their estate. Typically you will want to set up an LLC to hold title to the property. You and your partner will be the members. You then record a note and deed of trust to secure the investment.
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Maayan Cohen, I am also on the 50/50 train. That's how my wife and I structured it, as well as the 3-4 mentors we worked closely with as we got started.
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y
A 50/50 appears to be wildly disproportionate to the parties' relative risks. What happens when the partner whose sole duty is to provide services stops mid-way through the project? That party still has a claim to 50% of the profits that needs to be unwound legally regardless of what the contract specifies.
Do you contemplate putting the services partner as a responsible party on the note? What if he/she does not qualify under the lender's standards?