[spex x]

I agree with the other posters here. Something about this scenario seems fishy. Traditionally in hard money lender, the investor finds the deals, does the fix up, sells the property. The HML only sits back and collects money. So I can't imagine why this guy would want to find, buy, and fix the property, but give someone else half of the upside? What does he get out of bringing you guys into the deal?

One thing that occurs to me is that maybe his plan is to buy the property, write you a mortgage, but conceal the mortgage when you go to get the HELOC. Honestly, I doubt that you'll get any bank to work with you on a HELOC when there is a hard money loan out on the property. Who is going to want to get in line behine a HML? I can't imagine that the HELOC will fly unless the HML is concealed. That, of course, is mortgage fraud, so be careful.

The world of serious RE investing is pretty small. I can't imagine that an established investor would throw out a hard-won reputation over a few $50k deals. But who knows?

Honestly, I think that you should meet with the guy and have him give you a written proposal. He needs to clearly spell out how the deal will work. Ask him very directly why he needs you at all to put deals together. It seems odd to me that an established guy would want to partner with some newbies that aren't experienced. If these deals are so good, he could pretty easily find another established investor to work with.

In sum, I think that you should hear the guy out. Probably it'd be worth it to join the local REI club and start asking people about his reputation. Also you could find an objective party to look at the deal and offer advice.