All Forum Posts by: Bill Hinshaw

@Mike Lightcap I have a flipping business where my wife and I have partnered with our GC, and we split the profits. I've struggled with this question myself, and I've seen it asked on this forum many times (you might want to search those results).

The best recommendation I've received came in a conversation with @Jon Klaus recently. The starting point is to consider the amount of money you would have in the deal and the time value of money your partner will put in the deal. If you are doing an all cash deal for 500k and your partner is only putting in 4 months work, then the profit split should greatly favor you. You would have to balance that against the actual value you've agreed to assign to your partner's time, since they probably wouldn't want to agree to any less than that.

The equity share on a rental should follow the same logic.

If you just want to pay him for his time, a 15% premium on labor and materials is pretty standard. That is the number we used on our most recent flip.

I can definitely see the potential in the house. The wood floors could look really nice with a little work. The surrounding area looks nice - lots of green space. Kitchen appears to be a decent size and layout. Is the house structurally sound?

Budget questions/comments: No new lighting or plumbing fixtures? Countertops and backsplash in kitchen? Flooring budget seems a little low

I've got your total out of pocket at around 37k with a 73% ROI if this goes as expected. I know @Account Closed was basing his calculation on your total risk.

Either way, I agree with him that this deal is a little slim, but I would still do it if I trusted the numbers. My primary concern is the 25k rehab budget being enough. Since this is a condo, you don't have to worry about roof or foundation - that's a definite plus. That said - you can chew through that 25k quickly even in a cosmetic renovation. I would recommend you come down another 10k on your offer, just for a little added pad. Also, as others have said, confirm your rehab numbers with a couple of contractors you can trust - either before you buy or during contingency period (if you have one).

Best of luck! Please let us know if you get the house!

@Michael Oldani

I've tracked multiple flip houses in my farm area. Roughly 4 months is the average time from when the property was purchased by a flipper and then relisted. These are usually pretty extensive flips with probably 80-120k rehab budgets (although I have no way of knowing how much they spent, but I have a feel for what it would cost me to do the same thing). Rehab would include framing, new electrical, new plumbing, mostly new drywall, full cosmetic rehabs with ARV in the $200 - $250/sq ft range.

You can do this yourself if the flipper bought the property on the MLS. Redfin (and probably most other sites) will show you the history.

If you don't mind sharing, I'm curious as to how the deal is defined and what the numbers are. It almost sounds like you are a passive investor in the deal with very little control. Are there other investors? Does the turnkey company have any money in the deal?

If they expect you to fund the deal and have very little control of the budget, finish, timeline, etc... that seems like a lot to ask unless it is well defined up front that that is how they work.

Your request for a more detailed budget is not out of line at all. I would expect that and more if it were my funds on the line. 

We expect to pay $2 - $2.50/sq ft for 2 tone paint including trim and ceilings, and we supply the paint. We've never come close to $1 in our area (White Rock, Richardson, etc). Hope that helps. Let me know if there are other specific areas I can give feedback on. 

@Evan Thomas I would say that yes - you will probably damage the ceiling in some areas when using water but also yes, it is worth it for the time savings. That stuff comes off in sheets when using water, but is quite a bit more stubborn when it is dry. 

I would guess that you're going to need to do some patching/smoothing either way. I completely floated my ceiling when I was done. May have been overkill and it took a while, but I don't remember it being that costly. And it looked brand new.

If your house was built after 78 you shouldn't have to worry about asbestos, right?

I scraped the popcorn from a rental, it's extremely simple as long as the ceiling hasn't been painted. Home Depot sells a scraper that has an attachment for a plastic bag to catch the debris as it falls. Spray an area of the ceiling with water from a pump sprayer, wait a few seconds and begin scraping - works like a champ. It's a very messy process, so you might want to protect your floors. 

We floated the ceiling before putting on texture - looks brand new.

@Heather Harrison Sorry - days on market. I'm no help on narrowing the search to just stilt houses. 

The spread you are seeing between list and potential ARV looks really good. Could you get 275k for it? That would leave room for a 40k rehab, 35k profit, 10k holding with 8% taken out for title policy and realtors commission. And that's with you paying full list. If you could work your numbers (lower buying price, reduce rehab) so that you could exit at 250k, you might be getting pretty close.

Just verify your rehab numbers. 40k on a full gut rehab with roof, electrical and plumbing is going to be really tough (at least in my market). If you can get by with just cosmetics you might be in business.

Definitely try to find confirmation that you can get that on this type of house.  

Are there enough sales of stilt houses in the area to put together comps? Can you find any stilt houses close by that were rehabbed? What did they go for? What were their DOM? If you can't find any, it may support what your coach is telling you.