Partnering on a deal. Get investment back. Split profits

1 Reply

I'm thinking about partnering on a deal with someone. There a SF home for 137k. It's worth 160k+. The person that found the deal wants me to put 7200 into it.  5k down plus closing costs(taxes and insurance). I want to make this example as simple as possible. If we were to flip the property, would I get my down payment and be made whole before we split the profits? He found the deal. He wants to split the profits without making me whole first and splitting my down payment like it were profit. That doesn't seem right. I don't think it's a good deal when I'm splitting my down payment with my partner. 

To clarify for example, if the profit was 30k. He says we each get 15k. In my mind, I get my down payment of 5k back leaving 25k and if we split that, we each get 12.5k after I'm made whole. Is there a common way to approach this type of deal? If you've done a deal like this, how did you go about it? Any feedback would be appreciated! Hopefully this is the right forum for this question

You're right, he's nuts.  I can't think of a better way of putting it.  Of course you get all your money back first, otherwise, you're paying him to make the deal happen, and he's making a profit off of the deal AND you.

Here's how you do it:

1 - If the profit was 30k after you got your cash back, and paid for all expenses, closing costs, etc...you would each split that based on whatever you agreed to for a % split.

2 - I wouldn't partner with this guy...ever.  Either he's, like I said above, "nuts", or not trustable.

3 - Run away from this guy...and never look back.

4 - ...and this deal isn't that good to begin with, so I'd run away from it too...unless you could get it for at least $20k less.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here