Joint Venture terms

[Reed Starkey]

A local flipper presented me with a house flipping JV opportunity. She already has hard money lined up, but needs me to fund the 20% up front and the rehab costs. She will be handling the contractors, so I will mostly be hands off of this investment, but it is my money in play. I am wondering what percent of the profit should I ask for?

The numbers will look something like this:

Purchase Price           140,000

Rehab Cost                 50,000

ARV 260,000

Thank you.

[Garrett Pearson]

I would definitely ask about her financial ability but I also know that there are  investors that bring experience and sweat equity in deals instead of cash even though they may have the money.  Regardless, I would definitely ask the question. More importantly, I  would look at deals that she and/or GC has done together. If they haven't done  any deal together, I would need to see his credentials and possibly past work of the GC. I would also like to get an idea or a vision for the work for the work to done. Lastly, I would check out her previous flip. I am all for the newbie but if she I would need to hear the rehab plan from her to insure that her vision is one that would place the major focus on the rehab/upgrades to get a quick sale. Sometimes people will uninvest on the "right" upgrades and/or overinvest on the "wrong" upgrades which could make the difference of time it sells. Keep in mind that my references to "right" and "wrong" are those things that will make a house more attractive and also anything that maybe necessary or expected amenities in certain marketplaces.