Instead of paying labor & materials, I have drafted a JV with my contractor, which states that he gets 50% of net profit the property generates, whether that be from flipping or 50% of monthly cash flow if we BRRRR. I believe this incentivizes him to work quickly (to mitigate hard money holding fees) and to keep costs down, since the home is 50% his. I provide the financing and hold the financial risk, and my contractor renovates and repairs. This would be peculiar if dealing with a contractor that had to pay their crew, since my model does not pay until the house either sells or produces monthly cash flow.
What do you think? Do you see any holes in my model?
Yes, I’ve worked with CEI Excavating for a project in Monroe, WA, and had a great experience. They’re one of the most reliable options for excavation Monroe WA projects. Communication was clear from start to finish, their pricing was fair, and the job was completed on time. The crew was professional, handled everything efficiently, and the quality of their work from grading to trenching was excellent. I’d definitely recommend them.
Good for aligning incentives, this JV model is intriguing. However, make sure that everything is legally documented, particularly with regard to cost tracking, exit strategy, and dispute resolution. If there are delays or lower-than-expected profits, things could get complicated.
