Posted by Brandon Jarrett, MBA on August 23, 2005 at 07:06:51:
Thanks for the response. These investors are hands off and located in California. For me (The Builder), I have 2.6M in outstanding debt and cannot qualify for more $ at the present time. So, this is a way to continue my income stream without any financial risk!
Investor Builders Group - Posted by Brandon Jarrett
Posted by Brandon Jarrett on August 22, 2005 at 07:59:28:
Here is the scenario:
I have a group of investors in California I have been selling property to in Atlanta, GA. We now have an opportunity to build new homes in the 300K price range. These investors are willing to put up the financing for the new homes on a construction note in exchange for 30% of the NET PROFIT.
This scenario involves myself running the construction of the homes and all other aspects of sales and marketing in exchange for 70% of the NET PROFIT.
Is this a solid idea or is this trouble waiting to happen?
Re: Investor Builders Group - Posted by John B. Corey Jr.
Posted by John B. Corey Jr. on August 22, 2005 at 18:09:56:
Based on how this is presented, the investors are not very bright.
They are assuming there is a profit that will be produced from the transaction and are therefore willing to split the profit. The net profit might be zero or some small amount if things do not go as planned.
Ignoring the construction issues, the loan terms sound great for the builder.
The devil will be in the details and how this gets written up. Even if the investors are putting up the funds you might want to see if there is a way to enhance the transaction so that you build a track record with a local lender. The investors might not be there in the future.
John Corey
Chelsea Private Equity LLC
Re: Investor Builders Group - Posted by Don Dion
Posted by Don Dion on August 22, 2005 at 12:41:36:
Are you a builder now or would this be your first venture into the home building bus?