JV Agreement 3 party - First time questions
Member since 2022 · 1 post · 0 votes
Hello
I'm considering an opportunity to work with 2 other partners to buy a knockdown and build a vacation home to flip.
The 2 other partners would do the labor. One is a reputable home builder in the area and the other a GC / Kitchen / Bath company (2-4 employees).
I would be the money guy. I'm trying to figure out what a fair distribution of profits would be.
What If I'm covering the purchase price of the home and paying the partners for the materials and their labor to build the home upfront?
What if I agree to cover all material costs and they need to invest the labor and their labor comes off expenses after sale?
What is typical or is every partnership different?
In the scenario where I cover all costs up front (including the partners labor), I don't see how my partners would assume any of the risk.
I need to be protected from overages in labor and delays in build time.
If I'm paying for their labor to build upfront then, for the partners, this partnership would be just some steady work and a potential payout on the flip.
For me, I would be taking all the risk and hope they don't bleed the profits with unexpected build/labor costs.
In the area that I'm looking to do this demand is high and it's difficult to get a builder to schedule work less than a year out.
The opportunity to have a good builder who is ready to work and will commit time to this flip is why I'm interested.
Appreciate any guidance. Thank you.
I'm considering an opportunity to work with 2 other partners to buy a knockdown and build a vacation home to flip.
The 2 other partners would do the labor. One is a reputable home builder in the area and the other a GC / Kitchen / Bath company (2-4 employees).
I would be the money guy. I'm trying to figure out what a fair distribution of profits would be.
What If I'm covering the purchase price of the home and paying the partners for the materials and their labor to build the home upfront?
What if I agree to cover all material costs and they need to invest the labor and their labor comes off expenses after sale?
What is typical or is every partnership different?
In the scenario where I cover all costs up front (including the partners labor), I don't see how my partners would assume any of the risk.
I need to be protected from overages in labor and delays in build time.
If I'm paying for their labor to build upfront then, for the partners, this partnership would be just some steady work and a potential payout on the flip.
For me, I would be taking all the risk and hope they don't bleed the profits with unexpected build/labor costs.
In the area that I'm looking to do this demand is high and it's difficult to get a builder to schedule work less than a year out.
The opportunity to have a good builder who is ready to work and will commit time to this flip is why I'm interested.
Appreciate any guidance. Thank you.