I am possibly moving to a new location within the next month, but I absolutely love the market I'm in now. I've made many contacts, including contractors I can trust that also have the same mindset as me. The location I would be moving to is about 8 hours away. Has anybody ever been a distance equity partner? As in I would finance all deals with my contractor partner doing his thing, then split profits 50/50?
We work that model all of the time but my experience lies on the other side of the coin.
Boots on the ground.
The types of splits are going to depend on several factors.
What kinds of deals are you guys putting together?
I would prefer to deal with flips only since I won't be in the region. Which also means I'd leave all deals up to realtors, since I won't be able to personally be there on the majority of deals. How do y'all handle the actual deal making?
Hey we do a lot of those in CHI and ATL. We have probably close to 8 going on right now. I am a little more like @James Wise meaning we are the ones finding the deal then overseeing everything.
We have structured it a couple different ways...
1. My Favorite--- we find the house then someone like you purchases it and owns it on title we are not on title. Then we order all the materials from HD and hire and over see all the contractors. We receive the invoice sign off on it once it is complete and then send it to you for payment directly to the contractor. We list it and sell it then at closing you sign off on the HUD etc and all money goes directly to you and you pay us our split.
2. A lot of the same but we close in our name with you funding and taking a first lien. Half of construction is funded up front then half way through (with pics or video) of what is done you send the other half. We list it and close and then we pay you your split after closing. Of course you lien is paid off at closing as well.
All that to say, IMO I would be nervous to partner with a contractor hopefully there is another type of relationship there as well. If he is your contractor he is sordof double dipping and you have no way to really verify or double check anything. It can still work but you would have to put some good checks and balances there with a contractor as a JV partner.
@Andrew Cordle that's a very good point. The contractor is a pretty close friend, but I still think I need a system of checks and balances. What about a third party that would be willing to do the realtor's part? I would feel way more comfortable with my contractor just focusing purely on getting the houses done
And I would be willing to let the third party part of the split, so hopefully their vision and goals would align with mine
That is what I do I have a Project Manager that lives there. I pay him a salary plus bonuses to stay on budget and on time. I do not split anything with him nor my contractor.
FYI I have worked with him for years while I lived in that town then when I moved away I sordof promoted him and let him run it. I do of course go out there periodically as well.
@Andrew Cordle alright thanks. That makes sense.
If you would like I have a joint venture agreement that we use. I can email it to you.
PM me if you want it
Alright just did!
I currently use JV partnerships, some local and some not. I am an investor that does both flips and holds. I live in the Portland market which is HOT! If you're looking for deals and partnerships and ever want to expand, let me know.
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