need advice - investor/worker partnership - Posted by Josh

Posted by dimpil on October 17, 2003 at 11:54:33:

Yes but Ed, wouldn’t the partner consider his time in labor value also? Each person is bringing something of value to the venture, money, time, labor and labor can be viewed as an asset.

need advice - investor/worker partnership - Posted by Josh

Posted by Josh on October 17, 2003 at 09:08:23:

I am considering starting a rehab business with a friend of mine. He would provide the labor/construction know-how and I would provide the capital (along with bank financing). My initial investment would be around $20K. We are planning on doing one house, and then seeing where it goes from there.

We have discussed splitting profits 50/50. My question is: do we split “profits” only AFTER I get paid my capital contribution back, or do we split profits BEFORE I get it paid back (making it much riskier for me). Anyone have any thoughts on this? what is a typical structure in these kinds of deals?

Thanks.

Re: need advice - investor/worker partnership - Posted by dimpil

Posted by dimpil on October 17, 2003 at 11:26:36:

Really that is up to you. IF you are putting money into a business the that 20 is for the business and profits split above capital, expenses etc. You really need to work it with your partner and the two of you come up with a fair deal.

Re: need advice - investor/worker partnership - Posted by Ed Garcia

Posted by Ed Garcia on October 17, 2003 at 10:03:07:

Josh,

Your split is after you get your money back. Your $20,000 becomes a debt or an expense of the deal.

All costs and expenses must be paid in order to know what your profit is.

Ed Garcia

Re: need advice - investor/worker partnership - Posted by E.Eka

Posted by E.Eka on October 17, 2003 at 11:55:10:

THis is the basic premise of accounting and setting up a partnership. You and your partner should consult a lawyer and an accountant. BUt in a nutshell, Ed is right.