Contractor Talk - Professional Construction and Remodeling Forum banner

1 - 6 of 6 Posts

·
Registered
Joined
·
210 Posts
Discussion Starter #1
I've got a question for you guys that have been there....

I've got some clients that want to invest some money and do some high dollar flips in a vacatation/tourist area. Our market is homes that are near beachfront and will sell in the $500 to $750 range when finished with $70k or more is work added.

When dealing with people that are nothing more than an influx of money, what kind of a cut could I ask for and expect to get. Naturally, I'll get paid as a contractor for the work I do in the house, but I want more than that. I want a percentage of the net, otherwise it isn't worth my trouble to work an hour and a half away from home and I'll be doing all the leg work with the realtors and new owners etc. The investors probably won't even see the houses but a couple of times.

Has anybody had a situation like this before?
 

·
Fine Handcrafted Opinions
Joined
·
994 Posts
Ideally, you could borrow the money at an agreed upon interest rate, buy the house, and pay them back when you sell it. Then it is your deal, and only financed by them. The profit once they are paid back is yours.

However, you may not find an investor willing to accept those terms, and you'll have to negotiate. It depends on which party needs the other more. If you can provide them expertise and security that they cannot just go out and replace easily, then you have more power to get better terms. If they are the only party willing to lend you money, and you can't get it thru a bank or other investors who will agree to more favorable terms for you, then they will be in a position of strength, and you will have to accept their terms or get out of the deal.

There's my two cents...
 

·
Registered
Joined
·
12,560 Posts
I've got a question for you guys that have been there....

I've got some clients that want to invest some money and do some high dollar flips in a vacatation/tourist area. Our market is homes that are near beachfront and will sell in the $500 to $750 range when finished with $70k or more is work added.

When dealing with people that are nothing more than an influx of money, what kind of a cut could I ask for and expect to get. Naturally, I'll get paid as a contractor for the work I do in the house, but I want more than that. I want a percentage of the net, otherwise it isn't worth my trouble to work an hour and a half away from home and I'll be doing all the leg work with the realtors and new owners etc. The investors probably won't even see the houses but a couple of times.

Has anybody had a situation like this before?
Unless they are expecting you to wait until they sell the house to be paid, they are the investor, you are the labor... why do you think you should share in their investment when they are paying you for and you are providing the labor?

If they have to take a lose, are you willing to lose money along with them?

Charge accordingly for your travel/time, etc...

The only reason you would share in the investment return is if you are contributing in some way to the financial aspect of the investment (i.e. - share the risk)...
 

·
Thom
Joined
·
4,137 Posts
Kap is correct, unless you have skin in the game it's just another job and you have no claim for more than your regular charges.

Make them an offer. They put up the money, you work only to cover your direct out of pocket construction costs on the job. You are in it for your time, your personal overhead (transportation, phone, tools, insurance, etc.) then do a 50/50 split or the sales price less what they paid out for construction, when it sells.

At that point you are earning your share right along with the investors. Everyone has skin in the game.

Of course you will need to have an agreement that spells out exactly what work you will provide, amount of hours, time and days on site, etc.
 

·
90%-er
Joined
·
1,252 Posts
Speaking from one with a little experience in this area, I'm sure it goes without saying to have EVERYTHING written down and signed off on, in as much detail as possible. There's no room for a handshake type deal at this level, or even in the 150k range that we usually are playing with.

But I don't see how you could claim a cut of the profits without taking any of the risk
 

·
Registered
Joined
·
480 Posts
I've got a question for you guys that have been there....

''''''''''''''''

Has anybody had a situation like this before?
No But it is my ultimate goal (to Flip ) I had a guy who wanted to do it and he had money and credit
but i did not trust him enough to enter into a business with him nor did i respect him much because of the way he treats people.
Do you trust them ? If so and you move forward have a lawyer draw up an agreement to cover your backside .
I would like to hear how this works out please keep us posted
Good luck
 
1 - 6 of 6 Posts
Top