Posted by dell on May 21, 2003 at 23:35:37:
If there is such a thing as a typical arrangement it is probably 50/50 split.
We are talking to a couple people right now about doing partnerships. We would structed them this way.
The materials are figured in as part of the expenses, labor is not. If something needs to be replaced that the rehabber cant do such as installing a furnace, than that becomes part of the renovation expense that is paid before the profits are split.
The first deal we take 2/3 and the rehabber gets 1/3, if things go well we will split 50/50. In case the rehabber wants a bigger piece of the pie. Remember you risk losing all your money, he risks losing some time. If things go well you can always alter the ratio later.
Need advice on investor/contractor partnering? - Posted by Tom
Posted by Tom on May 21, 2003 at 10:14:42:
I am interested in REIng. I have some cash and a personal friend who does quality general contracting work. He does not have the cash but has the time and expertise to fix-up properties where I don’t have his time or expertise. What is a usual & customary split arrangement between he and I that might be worked out where I put up the money, he provides labor for the upgrades and we deduct the expenses out of the profit when we do a flip?
Re: Need advice on investor/contractor partnering? - Posted by Brent_IL
Posted by Brent_IL on May 22, 2003 at 22:35:00:
Why don’t you hire him to do the work on one deal to see if you can work together? Regardless of your agreement, I think he will resent doing all of the physical work without getting paid for his labor, and then splitting the profits in half. You may lose a friend. Pay him a bonus if he does a good job and finishes on time. Then talk about relative values.