Structuring a partnership
A buddy of mine had his father pass away about 3 months ago and has inherited his entire construction business. (He was planning on being a CPA but sometimes life has other plans) My friend grew up doing construction under his dad and knows what he is doing, how to deal with contractors, and already has long standing relationships with good contractors in the area. I have confidence he knows what he is doing and runs a good business His business is primarily new contstruction, he's not a big company but builds about 20+ homes per year from the ground up. In the past month he has established a remodeling arm in a seperate LLC in order to expand his business in that area.
I have been thinking about a way to partner with him as we are both young guys, and it could prove to be a great LT business opportunity.
My first thought was to set up a JV LLC for flipping properties in our region. I am a Finance/Accounting guy and can do the business side of things, looking at houses, doing our taxes etc. His expertise and relationships with contractors will cut costs and get the job done right.
How should I structure this type of deal? 50% of the profits? My concern with that is that his remodeling arm would be making money on the work and then taking 50% of the profits of the flip as well. I need to brainstorm (with the help here on BP) as to how to set up a deal with this guy and start building a business.
Also, 2 other partnership ideas - I have thought that once we have some more capital between us we could get into some buy and hold endeavors - say apartments, and use his contracting teams for maintenance, etc. and establish our own LLC and hire 1 guy to internally do the property management.
Also, there's lots of money in big contracts/government contracts. I know you have to get bonded, but how does that work, how much money is needed, and how could I partner up with him to potentially get into this side of the construction.
I know this is a bit broad, but I want to get into these business areas but do not want to run a construction company myself as my job. I want to stay in banking and money management but leverage my relationship with this guy.
Thoughts? Ideas? Suggestions?