Hello! I am getting ready to buy my first house. There is one that I am very interested in and is a no-brainer for a fix and flip. It is a hoarder house that needs mostly cosmetics, and is priced very low relative to the area. However, I do not have tons of liquid funds to invest in the property after I buy it.
I have a friend/co-worker who would like to front the cash to renovate the house and help me physically renovate it (we are both good with tools). He mentioned getting a portion of the profit when selling the house. My question is, what is a good realistic deal format for both of us. Both of us would be doing equal amounts of physical work. I would pay the monthly mortgage payments to a bank. He would front the renovation costs.
I have always wanted to get into RE investing, but am looking for some good guidance for a good deal format to get me started. Thank you in advance!
Sounds like both of you will but down the same amoutn of work.
I would go 50/50 after on the profits. Say you bought for $100k and spent $20k on renovation costs. Out of those $120k you put down 80k and your partner puto 40k and you sell the house for 160k but had to pay 10k in closing and other costs making your net profit $30k (15k for each). You would get 95k (80+15) and he would get 55k (40+15).
Keep in mind though that if you are getting the loan you are risking your credit so maybe you deserve a little more than 50% or some other kinda of incentive
Thank you! That is kind of what I was thinking also, but wanted to get some more opinions. I appreciate it!