Seeking Advice and Suggestions on Protecting Myself: Flip/Business Deal with Others

2 Replies

Hello BP...  I am looking for expertise advice and any suggestions you may have for me regarding a flip, which is about to happen, and I would like to make sure that am protected and also not missing anything.  

I am in a business deal with two others, for a total of three, to buy, rehab and sell a house, which we will be closing on by next week. The two other members have a licensed business partnership together - meaning they have a real estate business with both of their names on it.  This would be my first flip, and theirs. While we are all new to flipping, they have more expertise in real estate in general, as agents and contractors.

They have the means to private money which will fund 85%, while I have the remaining 15% - this is where I come in - kind of a third wheel.

The agreement is that I contribute my private money and some time for basic rehab, in return for the experience, learning and 15% of net profits, and of course my 15% of initial capital, while they split the rest among themselves.

They said  that they will write up all of our contracts, including mine for the 15% initial project capital, as well as, my 15% return on net profit.  I have done business with one of them before and I am comfortable going this, but I'm sure you all understand that I would like to be protected.  

Again, I am new to this, but I am excited to learn the process and everything that this involves, and I am content with the 15% return.  With that said, please understand if I may sound naive. 

So, will a basic contract showing my initial 15% and 15% return be enough?  Should I expect/demand the contract to state that I will be guaranteed return of my initial 15% investment, as well as, the 15% return?  Meaning I put 15% and I want to get the 15% back, plus 15% on profits.  In terms of putting in additional work and time, this is really vague.  Not sure if it will be stated in the contract but it's really subjective.

Any and all advice is welcome - thanks in advance.


Yes, you need a contract, how much is 15% of the money going in 5k or 50k.....

What you are doing is loaning money, a note and deed of trust. Your 15% of profits comes from a partnership agreement. 

You can also contribute to the project by joining them with a contribution to capital, in that case a note and deed of trust isn't necessary, but needs to be resolved in an operating agreement of the LLC.

If there is significant money in on this, I suggest you see an attorney, you can use the same contract over and over again in the future. Doesn't sound like you should be drafting partnership contracts, so see an attorney. 

You need things in writing, it's not about trusting a partner, it's about you or them dying, ending up in a hospital, nursing home, getting a divorce, going bankrupt, everyone needs to be protected. Good luck :)

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