Maybe stupid ? Owner financed fix and flip?

Question

I have someone who has a house they would like to sell but unfortunately they dont have the money to make the fixes needed to get premium for it. My thought was could I get it under contract and then market it to be sold and at the closing i would just pay them what we agreed upon and i keep the extra. Example, they want $120k (neg), needs about $10k in fixes, comps in the area are $170k. Is this like a wholesaler-fix and flip hybrid? Or would it be better to simply partner with them, they are friends of mine, with the repairs for a percentage of the profit?

Charles Carillo · Answer

@Phillip Ambrose

I am unsure if I would do any business with friends, but I feel the safest scenario is lending them the money to make the repairs (while also placing a lien on the property). You are protected, you make some money on interest, and your friend gets a much better price for their property. With the scenario you explained above, I feel there would be some awkwardness in the relationship if you invested $10k and months later made $40k on their home.

Chris Seveney · Answer

I would not do the work without either a contract to do the work or some type of interest in the property whether it be through some type of novation agreement, contract for deed or straight sale to you.