Investor · Vancouver, British Columbia · Member since 2017 · 7 posts · 0 votes
Hi,
I am interested in making my second deal, I came across a rare opportunity that is a little complex. The homeowners want to sell the house because there is a problem with the foundation of the house.
The homeowners just want to get rid of the house but their son suggested that we have him fix the problem and do some reno as he is a contractor and I will be the investor. His contribution is making the deal happen and managing the project which I believe will be successful as he knows exactly what needs to be done. How would you break down the earning assuming his not investing anything (not because he doesn't want to)?
Rental Property Investor · Glendale, CA · Member since 2013 · 685 posts · 334 votes
7y
If your plan is to have the current owner repair the foundation along with other upgrades, one suggestion is to complete the renovations during the escrow process and only close if the repairs are executed as drafted in the contract.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
I would not let the son make the repairs. There are so many different foundation issues. The son can perform temporary repairs when really it’s an expensive issue. Get a real bid from a licensed contractor. One that won’t be bias towards his parents.
Investor · Vancouver, British Columbia · Member since 2017 · 7 posts · 0 votes
7y
Thanks for the answer, but he isn't the owner he is the son of the owners and they want to sell now, so the deal will be to buy for a low price that takes into account the renovation, risk, expected gains, closing costs, interest etc., I will fund 100% of the investment he will make sure the deal happens for the right price.
I would not let the son make the repairs. There are so many different foundation issues. The son can perform temporary repairs when really it’s an expensive issue. Get a real bid from a licensed contractor. One that won’t be bias towards his parents.
I think that this where I can shift the risk to him to, i buy the lot for under market value where no one would be able to get the deal at this price and he gets the project plus additional gains when the house is sold, I can have agreement where he loses his gains if he doesn't deliver or even gets his job value decreased that way he is also in a position where he must deliver.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
So you bring the son on after you close on the property? Sounds like you're thinking about bringing him on as a partner. I find it a little strange. Why wouldn't he just do the work for his parents and they sell it.
I would still get a second set of eyes to check it out even if you decide to take the son on as a partner. Wouldn't want any surprises. To be clear, the risk will still be on you. Worse thing that happens to him, he breaks even on materials and labor. Worse thing that happens to you, you close on a house that costs much more money to repair than you thought.
Just something to consider. Best of luck moving forward.
So you bring the son on after you close on the property? Sounds like you're thinking about bringing him on as a partner. I find it a little strange. Why wouldn't he just do the work for his parents and they sell it.
I would still get a second set of eyes to check it out even if you decide to take the son on as a partner. Wouldn't want any surprises. To be clear, the risk will still be on you. Worse thing that happens to him, he breaks even on materials and labor. Worse thing that happens to you, you close on a house that costs much more money to repair than you thought.
Just something to consider. Best of luck moving forward.
Yep this is the scenario, the son is key to get a good deal, parents don't want to be involved or invest a penny they just want out. I will have to bring down the price as if there isn't anything built on it to reduce my risk, hopefully it's doable. What share from gains would you give the son?