Business model ideas for remote invester / local flipper
I've had some success purchasing turnkey properties remotely and leveraging the local real estate agent / property management firm to get the properties freshened up and renting.
Recently, I stumbled upon a local general contractor (GC) in my remote market that has been buying a flipping multi-family. I am limitted in the supply of turnkey properties, and the GC is limited in the cash required to purchase a property and float the rehab cost. Any advice on what works and/or doesn't in a business partnership like the following:
1) Investor (me) purchases a distressed property: $100K
2) Investor (me) or GC (partner) pays for rehab cost of property: $20K
3) GC (my partner) does the rehab of the property
4) Property is reappraised and refinanced: $150K
I want to give the GC incentive to perform the rehab quickly but also take pride in the workmanship. I think I can do this by splitting the profit ($30K) equally between final appraisal and purchase + rehab cost. Is this too generous to the GC? Would you have the GC pay for the rehab and then split the profit?
Thoughts?
Eric