In terms of joint ventures, I am fairly new at this. I have a property under contract and looking to do a flip. I am not putting any of my own money in this deal. I am just putting the deal together. Does anyone know what would be the proper split?
I do these kinds of deals Evan, A lot depends on the property numbers and our relationship, but in short I would just give you a flat fee on top of the purchase price or maybe 2% of sale price when it sells. This is a very basic.
Good luck tho.
If you are saying you aren't going to managing any rehab, but just found the deal then you are talking a wholesaler's fee. Usually that is 1-5%, or basically as much as you can get away with charging.
Just be careful, I don't know Canadian laws but "putting together a deal" can be something you need a license for. There is a fine line between just finding a property and putting a deal together.
You do mention, Joint Venture though so if you mean you have a money partner and you are going to flip it together with you managing the rehab and him providing the cash, 50/50 is typical but it can range another 20 points either way depending on exactly what skills you bring.
In our market, many of us will split from 90/10 to 50/50 depending on how much cash outlay the "involved" investor will have in play.
100% of the money is typically worth between 50% and 80% of the deal and the details have a lot to do with the range I provided.
In a JV where one party is putting up the money, it us typical that the other party found the deal, negotiated it, contracted it, managed the rehab, and managed the sale while the money partner was silent, only the money was working.
It is also common for the money partner to get a set preferred interest rate and then the 50% split. Of course, everything is negotiable!
Why don't you just go the hard money route? I think it would be more profitable instead of splitting the profits for all the work. The hard money is considerably cheaper than 50% or more. At least that is the route I would take for just one house. Now if we are talking quite a few properties at one time then maybe the jv is the best way to go. Its all in the numbers.
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