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Partnerships can make or break your house flipping business depending on how they're structured. We dive into the critical differences between debt partnerships (where your partner acts like a bank) and equity partnerships (where your partner owns part of the deal) to help you choose the right structure for your situation.
• Debt partnerships: Your partner loans you money with interest like a private lender
• Debt pros: Simple to explain, easy to document, you keep all upside
• Debt cons: You carry all risk, may require immediate payments
• Equity partnerships: Your partner invests in exchange for a share of profits
• Equity pros: Shared risk, no monthly payments, attractive to partners wanting upside
• Equity cons: Giving up profit, potential for disagreements, more complex paperwork
• Choose debt if you have experience and confidence in your numbers
• Choose equity when scaling fast or building long-term partnerships
• Always communicate expectations clearly and put everything in writing
• Pro tip: Present potential partners with both options and let them choose
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