Updated about 7 years ago on . Most recent reply
Working percentages out with Lender.
Hey guys! My name is Darren. I am from Pennsylvania working on my first flip.
This may be a little long and confusing so I will word it to the best of my ability.
TEAM:
My partner and I are together as a group. I will be in charge of all numbers, calculations, finding deals, talking to contractors etc. My partner will be more in charge of the labor work, doing what contractors aren’t needed to do while I help to save some money on expenses and rehab; and also just to learn and gain knowledge. And finally, our buddy who is our lender. He will fund the purchasing of the house (cash) and also pay for the rehab expenses. My partner and I will split the closing cost when property sells.
Scenario: (using rounded numbers to better explain)
Buy property for $70,000.
Estimated $20,000 in rehab costs.
Comps range from $120,000-$135,000.
After property sells, let’s say for $125,000. Leaving $35,000
$7,500 (6%) to realtor
$5,000 (2-5%) closing costs.
Leaving $22,500.
THESE NUMBERS ARE RANDOM.
What is the common profit percentage split between your company and the Lender? I want to establish as soon as possible before finishing a deal. I’ve heard 70/30 ... 60/40. But I’m unsure of who gets what.
Thank you all so much. I can’t wait.