Looking to flip my first home
If you were to partner with a contractor how would you work the specifics? Would it be a good idea to put up cost of house if contractor throws in all labor costs? Split material expenses and split profit? Just looking for advise on how to flip my first home. I’m thinking about getting a real estate license to save on closing costs. Any advise would be appreciated. Thanks!
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#5 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
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#5 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
@Rosa Lepore, while I have not partnered with a contractor, I have friends that have. Generally, it seems to have worked out fine for them. Their structure was to have contractor bid work on house, as if strictly hired help. That goes into the total budget, and then when allocating ownership, the labor piece is their % of the overall deal. For example:
$100k purchase price and costs
$50k materials
$50k labor
Contractor would get 25% of deal in lieu of payment for labor and money would get 75%. There are clearly issues with this scenario too: contractor could overbid project to get more ownership. My friend found deal, put in all of the equity, etc. If the contractor is supplying materials, this clearly needs to be addressed. It also assumes the contractor is in a financially stable position to be able to work for free for a 3-6 months on average before getting paid. And if they are not, what happens if you have to hire and pay someone to come finish job because the contractor needs to take on another project to make money.