Updated 26 days ago on . Most recent reply
Looking to JV with a General Contractor
Hello everyone, I found a partner I'd like to start flipping houses with. He's very well qualified, he actually reached out to me to partner up with. Our goal are the same, to start a flipping business. He used to own his own his own contracting business for 6 yrs, and is now the on site manager of a construction company that builds APT buildings and subdivisions.
I'm bringing the $$, he's doing some labor himself and charging me nothing for labor. Anything he can't do he will charge me book cost for his specialists labor, and cost for materials. HE offered me 70% / 30% partnership. I figure instead of a private loan, 70% sounded pretty appealing. I'll also get to help out and learn some trades with him.
My main concern is he doesn't have enough $$ now to have any skin in the game or cover any upfront fees. I asked if he'd give me a personal guarantee on a private asset around $10K, he said he doesn't own anything outright that's worth $10K.
Does anyone have protection recommendations so I can sleep a little easier? I'm getting cold feed since I'll have all the skin in the game financially, if something goes south on the flip and he doesn't make enough to pay me back, or we lose money, how will he pay me?.
Most Popular Reply
#2 All Forums Contributor
- Attorney
- Philadelphia
There’s a few things that stand out...
”Harder for me to find a deal since he’d charge me more as a GC vs. Partner. Have you gotten proposals from other general contractors confirming the 30% profit split is less than a GC would customarily charge as a fee for the same scope of work? If the profit margins don’t work paying ordinary GC fees, you shouldn’t purchase the real estate. The economics don’t work.
“I don't have the knowledge to walk through a house and determine what rehab costs would be. How much for plumbing, hvac, electrical, what needs to be done in each of those 3 categories.” Until you’re comfortable creating work scopes and budgets you shouldn’t be in the flipping business. You will be taken advantage of.