working for equity instead of pay.

3 Replies

Good day bigger pockets. I am a small business and I have been contacted by a large investor to provide a quote for providing and installing flooring in several of his units. I'm wondering is it possible to work for equity or a percentage of a deal or whatever instead of getting payed for work provided?
If so how should I approach him with the offer?
What should it look like?
what has worked for you in the past?

Any other suggestions that would be helpful would be appreciated.

Tough to try and get equity as a contractor in that capacity. I don't think I'd ever give any as a straight exchange for work. 

You'll be better off finding a good deal on a property, bringing it to that investor, and trying to partner that way. A flooring contractor brings nothing that any other flooring contractor couldn't be paid cash for - no need to give equity. A flooring contractor that brings a deal? That's actual value that is worth equity.

Yes it is possible.  It works best when the arrangement is an ongoing one where you do this on most, if not all projects.  Another way of doing this os where the contractor is paid for their costs only, then their profits come from the percentage of projects profits. The project's profits are based on using a number of bids as the base rehab cost.  When the contractor brings the rehab costs in less than that, these added profits are split (% TBD).  THis would be profit that would not have been made without this arrangement. From the Owner's standpoint, it's better to make a percentage of something than 100% of nothing. This also adds incentive for the contractor to max out the profit by controlling costs.

Originally posted by @Len Ayton :

Good day bigger pockets. I am a small business and I have been contacted by a large investor to provide a quote for providing and installing flooring in several of his units. I'm wondering is it possible to work for equity or a percentage of a deal or whatever instead of getting payed for work provided?
If so how should I approach him with the offer?
What should it look like?
what has worked for you in the past?

Any other suggestions that would be helpful would be appreciated.

Your best bet is talk to a lawyer first. This was a similar situation with my contractor and also my friend. I owned an existing property and wanted to trade work for cashflow. In the end, we both decided it's easier to keep contracting and investing separated. I think it's cleaner and easier to understand from both parties. There could possibly be legal issues that need to be addressed if you were to work for equity. Now, if you were planning on Joint Venturing with an investor on a new property then you could do the work in trade of a % ownership. Again, I'd grab a lawyer who specifically knows SEC laws and talk to them. 

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