What is a fair split on this real estate arrangement??

[cwsiggy]

My sister and her husband bought a house with a friend of theirs to add on and flip. The friend is providing all of the money from another state and will have nothing else to do with the construction and labor. My brother-in-law is providing all of the construction expertise (he is in construction management) and crews etc. He will also be joining in on the labor as he has time. What is a typical fair deal for the split on the profit when the house sells? Obviously, both parties are needed, but we are thinking that it should be at least 60% Brother-in-law, 40% financier friend. Maybe even 70%/30%. Any ideas.

[Stu Pidasso]

[ QUOTE ]
My sister and her husband bought a house with a friend of theirs to add on and flip. The friend is providing all of the money from another state and will have nothing else to do with the construction and labor. My brother-in-law is providing all of the construction expertise (he is in construction management) and crews etc. He will also be joining in on the labor as he has time. What is a typical fair deal for the split on the profit when the house sells? Obviously, both parties are needed, but we are thinking that it should be at least 60% Brother-in-law, 40% financier friend. Maybe even 70%/30%. Any ideas.


[/ QUOTE ]

Why doesn't your bother in law borrow the money to do the add on and forget about an outside financier.

Stu

[DavidC]

Pay the construction guy an hourly wage for construction. Pay the financier whatever interest/equity you guys can negotiate.

--Dave.

[touchfaith]

Isn't this is something they should have thought about loooong ago. How do you go into a deal like this without a clear understanding of the responsibilities and profit sharing?

Friends dont let friends go into business deals with friends.

[Durs522]

50/50. If you want to stay friends this is how it should be. Also none of this would be possible without the $$.

[blatz]

11 weeks is the over/under on the first huge fissure in the friendship, measured by a face to face cursing.

26 weeks for never speaking to each other again.

[Rick Diesel]

Terrible idea, you should just borrow the money from a bank. If that is not possible, the person providing the money should get AT LEAST 50%, if not more. As someone else already said, this is not possible without the money.

[cwsiggy]

Thanks for the advice. Don't worry about the friendship. It is not an issue and the split negotiations are going well. The reason all this was not carved in stone before is because they had to move very quickly in this area (downtown Orlando - most desireable school district) It will most definitely not be 50%/50%. But, of course, I see the point that it can't happen without the financing. She will be getting 10% annual interest on her money disbursed (20% down
and the monthly payments - hence the lower profit split) I'll let ya know what it winds up as.