Partnership with Contractor: Who gets what?

[Matthew Simmons]

I am new to REI so I apologize if this is amateurish but I am truly perplexed and want to make sure this partnership is fair and equitable for both of us. I am entering into a 50/50 partnership with a contractor, Mark. Mark is also a business associate of mine, investor and all around solid guy. I am going to lay out 2 different scenarios and I would love any and all input as to how the moneys are split, after the sale of a flip or the refi of a BRRR property. Keep in mind, in either scenario we both plan to reinvest the proceeds into our next property.

Scenario 1: 

Purchase Flip for $30,000

I put in $15,000 

Hard Money Investor puts in $15,000  (12% interest, no points on 24 month term)

Hard Money investor also pays for $10,000 in materials (distributed throughout the project)

Mark performs $20,000 in labor (we are both skilled estimators and agree to this number)

Home sells for $150,000

Who gets what?

Scenario 2:

Purchase BRRR property for $30,000

I put in $15,000

Hard Money Investor puts in $15,000 (12% interest, no points on 24 month term)

Hard Money Investor also puts in $10,000 in materials (distributed throughout the project)

Mark performs $20,000 in labor (we are both skilled estimators and agree to this number)

Mark will handle ongoing maintenance on the property, while I will handle the financials

We season it for 12 mos and refi for 70% of the ARV of $150,000, receiving $105,000

Who gets what?

[Rich Baer]

Scenario 3. Pay Mark for his labor and a percentage of the net. Partnerships are hard enough without partnering with a Contractor. The Contractor always feels like he is getting the short end and your friendship will diminish over time.