Services In Exchange for Partnership - HELP

4 Replies

Hey BP nation, I have a question and could use some advice. I am an architect, designer and project manager with over 25 years in the business. I have owned rental property, flipped a few house in NJ. I am now currently working on a row-house renovation to rent in Philly. (separate from my question, just a little background on my experience) 

I have architecture clients that have invited me in on a piece of a deal flip deal. They are bringing the cash and I am bringing the experience. My Question is  - Can I / Should I get paid for my services as part of contribution/expenses when we settle on the property? They get their principal returned to them, should i in return get my sweat equity back? $30-35K in time and my 25+ years of experience?? I wait till the end like they do. Any advice?? thanks in advance.

@Robert Feinstein I've thought about the same type of deal with about 13 years in the business. I would have to understand the deal 100% and be willing to go in as an equity holder. I would then only relinquish my partial ownership when the property sells and are repaid for my efforts. I would not do deal if I wasn't on the paperwork and an agreed to percentage I am entitled to. Waiting for a payout after you've done all this design/permitting/etc. work upfront is dangerous without some skin in the game.    

I am interested to see what others say...    

@Jared W Smith thanks for the response. I do have 15% equity being offered to me as a member of the LLC but wanted to see if I was on the right path asking for my contribution (A&D&CM) to be paid off upon completion of the project. They (the money side) have to wait for their cash contribution so I thought it was far I have to wait for mine)

But I think they think I was adding this service and it got washed away. I would just get my 15% after expenses (not including my sweat equity contribution) it almost equals the potential profits. 

So I am not crazy, i get my fees back and I get my kicker after all expenses. I am not crazy, am I? 

@Robert Feinstein If I am hearing you correctly, you'd be paid for an agreed to sum for your Professional Services + 15% equity, correct? That seems to be more or less the route I'd be looking for. I'm sure you are aware, this carried an inherently greater risk different than a typical Architect-Client relationship. However I'd argue that your prof. service fee be paid out before anyone gets equity cuts, in case the sale is not as lucrative as planned, you still get your fee. A safe guard of sorts I guess.   


that's it exactly. I would say if my "equity" is the services I provide as capitol investment it would be fair (more than fair) we pay out dollar to dollar with them on the cash they invested. But generally speaking we are an agreement, this does get accounted for and not just put into the deal never to be seen again. really appreciate your input. would love anyone else to chime in, specially if they see it differntly then Jared and I


Originally posted by @Jared W Smith :

@Robert Feinstein If I am hearing you correctly, you'd be paid for an agreed to sum for your Professional Services + 15% equity, correct? That seems to be more or less the route I'd be looking for. I'm sure you are aware, this carried an inherently greater risk different than a typical Architect-Client relationship. However I'd argue that your prof. service fee be paid out before anyone gets equity cuts, in case the sale is not as lucrative as planned, you still get your fee. A safe guard of sorts I guess.