I've never flipped before. My brother-in-law is a talented, trustworthy contractor. We talked about flipping together, me handling the finances, and him doing the rehab.
Has anyone had this arrangement before? If so, how did you split up the sale of the property? Was there a contract drawn up? Lawyer involved? Other best practices?
I would definitely without a doubt write up a partnership agreement. Here you get to discuss and document responsibilities, finances, profit, etc.
There are 1000 decisions that need to be made during a flip. Any of these can easily derail a flip and a partnership. You need to ensure you're on the same page.
Is he being paid for his construction work? What about subs? What's the timeframe and goals with the flip?
It's certainly doable, but needs a lot of planning!
Nice way to combine the two groups of people that can make doing business a disaster: Family and Contractors. You better outline the roles/responsibilities early and make it very clear who has authority/final say over decisions (maybe attach dollar limit to it). Have you done business w/ him before if not I'd proceed with caution and start small...
Just pay him as a contractor to do a job for you. Seems like the only way to make it a good project.
Hypothetical question: If you're half-way through the project and things aren't going well with the rehab -- for example, your brother-in-law isn't getting things done, the quality of his work isn't good or he gets hurt and can't finish the job -- are you going to be willing to fire him? If so, how will that impact the equity split and how will you ensure that you both get a fair return after bringing in a new contractor.
Go have this discussion with your brother-in-law and see if you can come to an agreement on how it would be handled.
If you can't come to agreement on that (for example, either of you refuses to accept a scenario where you'd have to find a new contractor, this isn't someone you should be partnering with in this capacity.
What do you value more , money or family ? Ask yourself and him this , and then if you decide to move forward , have every possible problem in an agreement
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