Posted by eric on November 02, 2004 at 15:12:59:
You can divide things up in whatever way you can all agree.
If I were the “silent” partner putting up the cash, I would want the largest portion of the profit since I would be the one with the largest risk.
Money Partners… - Posted by J.Jennette-NY
Posted by J.Jennette-NY on November 01, 2004 at 15:37:00:
I currently have a contractor friend and a money backer that wants to partner up in the rehab and quick flip business. The money backer will be a silent partner the contractor will be conducting any repair work or estimating, and I will be doing all other work, i.e. finding the deals, contracts, paperwork, closing, newspaper adds, prescreening prospects, etc. Our money backer indicated that he does no care if we have to hold the property or if we just quick flip it. I was thinking of forming an LLC. company. This investor has about 100K to invest. I would like to have some ideas on way’s to split the profits on our deals, unfortunatlly we have to split it three ways for starters. As for me conducting all, or most of the work, should I received the biggest profit split? Thanks for your imput.
John
Re: Money Partners… - Posted by Mark Reynolds
Posted by Mark Reynolds on November 13, 2004 at 22:03:38:
I always give the money partneer a “preferred” return before the split. Usually around 10%. Then we split 50/50 above that. I manage the construction as well as the other stuff.
Re: Money Partners… - Posted by Natalie Smith
Posted by Natalie Smith on November 02, 2004 at 16:04:20:
I agree with Eric that the money guy is taking most of the risk.
The contractor guy may think that he is doing all of the work and that all you do is find the house. I realize I am oversimplifying, but that’s what he will probably be thinking. Believe me, dealing with subs is no picnic, so he should get paid fairly. I’m not being biased either…I’m the one who does your job.
I would split it 3 ways equally. We’ve done different types of partnering deals and every party always seems to think that their part is more valuable than the other parts. Splitting it equally gives no one any more weight than anyone else.
I would either put the deed in all 3 names or have all 3 names in the LLC operating agreement. Also, if I were the one putting up the money, I would have a recorded note secured against the property for my risk.
Hope this helps.