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?
Thank you!
- Blake
