All Forum Posts by: Derek Cahill

I completely agree with what some of the others have said in this situation. If you are having a contractor come for just the work and they are not helping you sort out properties ect. It may be best to just to hire someone out.

To clarify what I said before.Whoever is doing the work is going to be giving the flipper or investor a price to do the work and for almost all of us, that is just labor cost since flippers are usually the ones buying the materials. 

I am physically the one doing the work,  so I give a quote based on the work that needs to be done. What ever that quote comes out to be, that is my investment. So if it's $20,000. I'm investing that much money into the property in the form of my time and craft. Than the same way other investor's put in their money and and get their initial investment back on the house plus interest or a percentage, I get my initial investment back in the form of money, since their is no way to give someone more time.

In the bigger scheme of things, and looking at if you just split 50/50 with your contact.  If you end up with a final profit of 10,000 and now you split it. You each get 5k. However did you get back your down payment back that you put on the house originally?  I'm assuming yes, because paying back initial investments is part of getting to your profit.   

So now you get your investment of let's say 10,0000 back so you are at ZERO for your investment.  Now you only get profit of 5K. . . 

If the contractor only gets his $5,000 but it was $20,000 worth of time he invested. Now he's in the red $15,0000. 

A HUGE aspect that I had to totally understand before I felt like it was a WIN WIN for everyone was the aspect that TIME IS MONEY and that is the investment we are making..

The biggest piece I see for this being an issue is if you have the money and you don't need any other aspects from the contractor and you can do it on your own. Than do it. . We are just starting out and all bring different strengths,  plus we are friends and push each other. Every situation is different and I hope I was able to better explain. If not, I would be happy to keep answering questions.

Derek

Just some insight from the opposite side of the coin. As the contracting partner in the Flipping aspect of things.  My investment to the process comes in the form of my time, which like you said is sweat equity. Where as my partner, who is the money man and financial loan side of things, uses his money as an investment. We both spend time looking over properties, he spends more time handling meeting with an other investors we may have as well as working with the hard money lenders.

I am a numbers guy, so I will explain my point using an example.

Say the down payment is $10,000 that my partner covers the cost for, as well as $10,000 for all material going into the house. (again this is just an example so I'm making the numbers easy to follow) 

Now, my end with the construction and remodeling. I come up with a total labor amount that would be $20,000 with the amount of work that needs to be done. 

Now when we sell the house, both of us are paid our portion of our investment back. His in the form of cash for cash, and mine time for cash.  Time is the most valuable item we have so their for splitting the money 50/50 after would only make logical since. It has been a big win win to start our flipping process. 

Hope this helps you all see the other side of the coin.