All Forum Posts by: Patrick Boutin

Hi @Patsy Waldron that's a little bit what I was thinking as I would be also participating and not just being the 'money partner'. Like I said in my original question, I want to learn as much as I can and just putting money won't do it. So I am glad you are validating my thought as I don't want to appear rude with him.

@Christopher Phillips thanks for providing the scenarios as it makes for good "food for thought". In this case both me and him would have sweat equity while I would put the funds.

I hope more people chime in so I can get more opinions but I is relieving to know that my original thought (60/40 or 65/35) wasn't wrong.

Thanks guys!

Hi @Christopher Phillips, thanks for the questions:

1. we would be financing the deal with Hard Money or a Portfolio Lender. I have great credit and good stable income. I would make the loan payments while the property is being rehabbed and until the property gets sold.

2. I was thinking as part of the agreement to have him not take any commission so we can have the option to offer a bit more to the other agents so they have more of an incentive to show our property.

3. It depends on the deal and what we can do physically but that would be a possibility if the savings are substantial enough to the amount of time we would have to spend.

First of all thanks for reading this as I realize it is a bit lengthy. I just think this info is important in order to give proper context to my question.

What would be a fair profit split on a deal where i bring all the down payment funds, good credit and stable job?

My potential partner will not put any money but will put in his time as he is self employed (he is a RE agent), has a more flexible schedule and obviously RE experience although I suspect not with RE investors. In my case, I will expect to spend as much time as I possible (around my 8h FT job shift) so I can be on site the majority of the time while the deal is taking place. I don’t want to just be a “silent partner” that only helps with the funds and then just collects a check. Instead I expect to deal with contractors, materials purchasing, planning and anything else needed throughout the deal in order to make it a successful one. So I also expect to work on the deal. I just know there will be a mostly consistent 9 hour time slot where I may not be available on. I have even considered moving my regular work hours from 9am - 5pm to something along the lines of 12pm - 8pm during the duration of the project (I think the morning time may be more productive time for project related work).

I have very little experience in Real Estate other than some small properties I purchased out of state, the reading and studying I have been putting on BP since August of last year (studying J Scott's books and using the houseflippingspreadsheet to learn how to analyze deals). My potential partner on the other side has more experience with RE transactions given that he is a RE agent. As far as I know and like myself, he doesn’t have experience rehabbing or flipping properties and has only dealt with contractors whenever some of the properties he has tried to sell or purchase (for his clients) needed work in order for the deal to go through. His time flexibility in addition with his RE experience would prove very valuable for the times when I will not be able to be onsite as well as being able to view many properties, making many offers that could take time and maybe frustrate another agent.. I even thought as part of the partnership, he could be the listing agent once we are ready to sell the house back and have him not charge his part of the commission which we may offer in part or fully to buyer’s agents in order to help the house sell faster.

The reason why I ask this question is because I have seen numerous times in posts and heard in podcasts how partners would split the profits 50/50. But of course in most those cases someone always did all the time and work without putting any money while the other put all the money but didn’t put any time nor get involved with the property.

In our case that wouldn’t be the same because as I explained previously I EXPECT spend time in addition to my money. I want to participate in the decision making, planning, materials purchasing, dealing with contractors, etc… as I intend this to be a learning experience where I can do this around my job and not just "collect a check". I can’t quit my job and I won’t at this time (it’s a good job) but I do want to create and grow the capital I’ve saved over the last few years.

So going back to my original question: would it be reasonable to offer something like a 65/35 or 60/40 to start instead of 50/50? I hope I don’t sound greedy as I mostly want to be fair. My thinking was that this way could work until he has some capital saved up and maybe then is able to assist with the down payment on a later deal and then at that time then do it 50/50.

What are your thoughts on this?

How about Google Maps "street view" as a way to "visit" a neighborhood? Assuming the pictures are recent, those can show you what the street looks like. It wouldn't be an entire picture and you can't see what it looks like at night nor can you get the "feeling" or the "hunch" that tells you a place is sketchy or not that bad.

What's your take on it @Wes Blackwell?

@Account Closed explains!

@Dana Whicker that makes sense as well. I will keep it mind. Thanks!

That's right @Joe Bertolino! I overlooked the fact that I was talking about the buy side and not the selling side yet. As you point out, the seller pays for this off of the sale proceeds. Since that's where I am it is pointless for me to look for a discount which will really come into play when I am ready to re-sell the property.

I also do understand that I get what I pay for. It's just a matter of trying to find ways of cutting costs wherever possible in order to make a deal work even when unexpected things do pop up.

Makes sense!

Hi @Account Closed. Thanks for the advice! That makes sense although given that I am new I couldn't be as hands off as you describe (yet it is good to keep in mind for down the line).

Now, I would want to see multiple properties in multiple areas of town to get familiar with them, the costs for the area and possibly pay for a contractor's time so he/she can show me what to look out for and what the costs could be.

This would be needed for at least some time before I would be comfortable enough to pull the trigger on something.

I just red J. Scott's book on Flipping Houses and he recommends to look at 100 houses in order to know the numbers inside and out. I doubt an agent would be too happy with me "tire kicking" that many properties and getting nothing in return or just a promise of a future commission...

So it seems like a catch 22 since I do need help and I do need a discount but an agent will be more willing to give me (a good) one as long as I don't ask much of him... hmmm.

Based on this, any discount would be better than none just don't expect a huge one it seems. Right?

I keep reading these posts where people recommend that one requests RE agents to offer a commission discount..

How much would you recommend would be reasonable without insulting an agent? From a newbie's perspective, wouldn't agents be reluctant to do so specially for a newbie who may need more handholding from the agent?

For example a newbie may need to look at numerous properties and do walkthrough (before being really ready to pull the trigger) while learning to analyze the numbers in order to know whether or not there is a deal.

What would you recommend to be appropriate and how can this be approached?

Thanks for your help!