Should My GC Partner Do The Renovations?

Question

There is a property I have 3 other partners who want to invest with me on. The 3 partners don’t know each other and I’m putting the deal together for us.

The property a $1M retail building that needs exterior renovations of about $200K. All 3 of us are funding the deal equally. Of the 4 total partners, 1 of them is a GC.

My question is I am unsure if having the partner who is a GC propose to do the work on the building is a good idea or not. My concern is the inability for us to shop pricing since the GC partner will feel he should be the one doing the work because he’s “an owner”. On one hand, this may be a conflict to the group, but on the other, we’ll know the work is done right and the property will be at the top of his list everyday.

I am wondering how my peers on Bigger Pockets would handle it or have possibly handled GC partners in the past.

Thanks for your input!

Tim Delaney · Answer

@Quy Huynh I think you can bid it out and discuss that with the GC partner. Explain that in respect to the other partners the work has to be bid out. He is either welcome to submit a bid or help evaluate the incoming bids.

If he gets upset by that explain that it is only fair to the other investors. If one of the other partners was a banker would you automatically go with him for lending without shopping around?

Ronald Rohde · Answer

I'd just bid it out and let the scope and amounts guide you. Let the GC be the owner's rep that way his interests are aligned with yours.

Nathan Grabau · Answer

I would be very weary about being in a partnership like this with someone you do not trust. You could try and get another bid for it and see if your partner is close to the other bid. I would do this with their knowledge though and just saw you want to do it as a cross reference.