Updated about 1 month ago on . Most recent reply
Arranging an agreement with a partner GC
Hey everyone,
I am going to start a flip project that would involve a massive renovation, that would include increasing sqft with a second story.
I started to work with a new GC that I met few years back, he helped me on a small stuff in a prior expansion project. But this time he is going to fully manage the project. Including full project management. he has few project managers under his belt that manages few projects.
Until now I was kinda doing project management from abroad (as I am living put of the country), and has also person to be boots on the ground to see how the proper job is being done. But as I mentioned, I got into position in my life that I don't have time and I want to delegate everything. So I reached out to him and he was glad to help.
After some discussions, he offered that he is willing to do the renovation all on cost, and that me and him would determine the extra fee to him for his job. I agreed.
The total project costs on cost estimated to be between 250-270k.
Now, I don't know how to arrange the terms of the agreement, especially his compensation.
I do know that generally contractors are charging approximately 10% of the job, but this way he can increase the job scope and go towards the top budget in order to increase his chunk. So I guess it's best to go with a fixed price?
I also want to entice him to finish the job fast, especially as I have holding costs of an hard money loan. So I thought about giving him bonuses per every period that he finished earlier than he said.
We already created a draft of an agreement that lists all of his duties, we agreed that he would get at least 15k now, and then the rest we would figure that out. But I don't know what number to offer him and if this way a good compensation term. So for now, we didn't sign the agreement that list his duties as the final financing terms are still TBD.
What are your suggestions for that agreement to be a win-win situation? That me and him would be happy? It can be also general, not only about financing.
Thank you!