Owning a house during flip or being private lender with lien

[Chris Hines]

My buddy and I started our own LLC to finance cash purchases of houses to flip. We are working with a local GC under the agreement that the profit from the flip will be split 50/50 with the GC and our company.

My question lies with the purchase of the house. Our GC said it would be easiest for them to be the owner and us to be the lender and have a lien against the house and provide the capital. My thoughts are I would want my business to own the house and have the deed in our company name. Heaven forbid something happens, if they owned it I would have to wait a year (I think) before proceeding with foreclosure on the property vs if I owned it, I could do whatever I wanted with the house and any point I so chose.

Am I overlooking something here? Any thoughts and advice are greatly appreciated.

Thanks for the help and am looking forward to being a contributing member to this great BP site.

[David Faulkner]

Wait ... you mean to tell me that not only are you going to find the property, finance it all cash, and finance the renovation all cash, then split the profits 50/50 with your GC, but that the GC having contributed 0% of the funds also wants to own the asset 100% and have you be a lender with a lien against it?!? Am I understanding this correctly? Can I guess whose idea this was? Wait, wait, don't tell me ... was it the GC who suggested this arrangement? Sounds like he is trying to pull a fast one ... I would find a competent and honest GC who is willing to put in a fixed bid on a detailed scope of work that is defined by you and execute that bid, with your and the permit inspector's verification prior to any money draws, of course.