Should I get reimbursed for the interest on the loan for my real estate investment?

Ok, a friend and I are “flipping a house”. She had the money to buy the house. I borrowed the money for the renovations. Every month until it sells I am paying a $325 payment on the $15000 loan I have out. 99% of it is interest. So, when the house sells, she will get back her investment, which is the puchase price of the house, the utilities, taxes, and insurance. I will get back all of my expenses for all the renovations. Should that include the interest I am paying every month or not? I believe it should. I HAD to borrow the money for the renovations or the house would have never got “flipped”. It was a NECESSARY thing. I believe the interest should be an included expense. There is nothing in our original agreement that specifies interest, it only states that all expenses will be reimbursed off the top, then everything left over is divided 50/50. Obviously it will be something my partner and I will discuss and work out, I just want to know what you think.

By the terms of your agreement it sounds like it would be. “all expenses will be reimbursed” and that is definitely an expense. But if you think about it, the money she fronted to buy the house is losing out on interest in a savings account–so by that logic her lost interest could be an expense. Just discuss it, but if you want a good long term partnership, I wouldn’t fuss about it too much–if she’s buying the property with her money, you’re getting a good deal out of it.

flipping houses 7 Streams Flipping – Options Agreements