All Forum Posts by: Isaac Frost

Aaron, I can see why you would think that.  I am being conservative with my approach.  The numbers do work in this case and I'm getting a lot of capital to work with on this project.  The theoretical payout for me is 18k profit for my GC company and 23k to me in profit split.  On top of that I already have my PM and labor covered in the construction budget.

Yes I could do better with other sources of money perhaps, but I'm new to this type of investment project and this money was available now and it was a "jump on this deal or lose it" scenario.

Anyone have recommendations for reliable funding at a decent rate in Portland, OR?  I prefer not to have to make payments on the property while the project is underway and want to payout after the rehab/sale is complete.  It seems like from what I've seen in Portland you need to be able to buy the house with cash to get the deal and then there is rehab cost on top of that.  Pulling together $500k in funding is difficult for me a this stage with my limited investment background.  Hopefully this will change as I grow.

Isaac

Thanks for the input. Yes I do want this deal to structure to be appealing/beneficial for the Investor and other potential investors in the future. My goal is not to make a bunch of money on one deal, but to set up a repeatable and profitable model to be used again and again. Although I have proved that I can deliver beautiful homes to people on budget for their personal residences I have limited experience with this type of venture. I love that I am in a sense the 'customer' in that I can make the decisions about design and materials without the they delays I typically get when a homeowner changes their mind right in the middle of a project (or can't make a decision at all). I know that I can complete the work in a shorter time frame in this scenario. And yes Mike Nuss, it's in Irvington. I also live in Irvington and have worked here so I know what I am getting into. That doesn't mean that I'm not worried though : ) I have accounted for a significant amount of time being added to our schedule and have back up plans if the the powers that be don't like the exterior alterations I have proposed. I plan on keeping a project journal of sorts by posting notes here in BP as things develop.

Chip, 

That is definitely a good thing to remind people of who want to act as their own GC.  I am a fully licensed and bonded General Contractor in Oregon with workers comp insurance.  I have been doing remodeling in Portland for a long time ; )

Cheers

So I'm in the planning stages of a full rehab in Portland, OR.  I'd like to describe the agreement that I came up with for what I believe is an equitable split for the proceeds and see what some more experienced rehabers & investors have to say.

ME:  I am the GC on the project.   I found the deal, did the research, closed it, and assembled the team.  I'm providing my own labor, and managing my crew as one would expect.  I'm doing preliminary designs before handing it off to my architect.  I am working with the community association to get approval through the historic district that we are in.  I am doing A LOT of after hours research and analysis prior to starting construction to avoid hiccups and delays once full construction is underway.

INVESTOR:  Supplied the cash to buy the house.  Funding the entire renovation project.  Has some input on design and scope of project.  They have done a few rehabs in the past but don't have the time to be very hands on.  They trust me implicitly and are allowing me to ultimately set the scope and schedule.  They would like to continue this relationship on future projects.

This is what I have proposed:

The Spit: Base split on net profits is 60% to Investor 40% to me with conditions.

Conditions: 

1. I am paid as the GC Company for the cost of the rehab plus my overhead (no profit) on the project.

2. The Investor gets a minimum ROI of 10% before the 60/40 split kicks in.

3.My GC Company makes profit out of the 40% with a cap of 10% of construction costs.

4. I personally receive the remainder of the 40% as long as the above conditions are met.

So essentially it works like this: After all of the work is done and the house is sold and the costs are tallied, the Investor is paid FIRST. THEN my contracting company makes profit, THEN I make profit as long as the first two entities are satisfied.  IF the project is less profitable the Investor has the lowest risk. I have skin in the game to keep costs in check and deliver a finished product that will sell for top dollar.

Anyone have comments on this or similar arrangements??  I'd love to hear what others are doing. Thanks!

Hello all you folks at BP,

So I must admit that I've been lurking in the forums for about 6 months now. I've read the Ultimate beginners guide to REI, followed all the keyword discussions for "Portland", listened to a ton of the podcasts. There has been so much great information and I'm very impressed with the amount of people who are willing to reach out to new investors and give them guidance. As for the podcasts, I love the sense of humor and frank discussions that are going on.

I'm currently a General Contractor and carpenter for my day to day job.  I've had customers that are investors who have hired me to renovate duplexes or other income properties.  I also did a large rehab/sell on a house in Seattle (UofW area) a few years back.  I was just a carpenter making wage on the project financed by my father and his investment partner, but learned a ton on that one.

My goal is to get more involved with flips/rehabs in the Portland area as well as slowly accumulate investment properties for cash flow.

I'm getting married in the fall and we are currently renting out my fiancés house and managing two rental properties that belong to her mother.  None of which really gets us any significant income but do give us lots of work to do!

My goal is to transition more into the REI sector and take on less direct to customer projects as a GC. I have LOTS to learn and I'm hoping this community will help me get more of the knowledge and network necessary to realize my long term goals.

I have lots more to say, but I'll save that for another post...

Stuart,

I'm a GC that's new to Bigger Pockets.  I'm in the process of looking for deals for flips/rehabs in Portland.  I have funds available and resources to complete all renovations or repairs needed.  Let me know if your interested in discussing the project.