Can anyone shed some light on the best way to structure JV deals for flips on residential. Potential partner is well established and seasoned- with an immaculate record, has own construction crew/manager and has done hundreds of residential/commercial and development transactions of all kinds. What's fair, what's typical? And how is the smartest way to go about it in a way that is beneficial for tax purposes? How do YOU do it? Any insight would be appreciated. thanks!!!
my partner funds......i do the stuff on the ground.....they get interest for their money.....and after the interest is paid....split it evenly
@CJ B. , I am just curious what your partner needs you for then? If you have the deal and the money, then it sounds like you don't need a partner, you just hire the contractor. They make their fee and you get all upside.
But, alternative, I would look at purchase price, labor cost (not including any profit) and material cost (again true cost). Add it all up. Let's say you are capital, so you buy house and pay the cost of materials. You get that % of total ownership. Your partner works for free, he gets that % ownership. When house sells, he takes the labor costs out and you take your investment, the profit is split based on ownership %.
If he is also overseeing all of the work, then you can build that into his ownership %.