Prev Blog
<<

Partnerships

 Next Blog
>>
crystalwillett Category: Inspirational
Current Grade: A
Total Views: 1466
Member Comments: 7
 Posted on: 05/19/2007
Posted by: crystalwillett
Blog Points: 5079
View all blogs >>

I need help with partnerships.  I met a family today who does amazing work.  He can do most anything.  A great partner to have.

Here's what I'm wondering.  If I bought a house and included them as a partner to get the work done in the rehab (they would be only supplying the labor), what is a fair way to partner with someone like that?  To clarify, I would be putting up the money for down payment, loan (mortgage) and all materials.  They would be doing all the work. 

I know some of you partner all the time in deals.  I've only partnered with my first house and he was just a friend helping me get started.  What is a fair way to consider partnering and how does it work money wise? 

Any advice would be helpful.  Thanks! 

Current Grade: A
Category: Inspirational
 Leave A Comment
AddThis Social Bookmark Button Social Bookmark
Vieving 1 - 6 out of 6 comments
kevinpyne

Posted By: kevinpyne on 05/26/2007
crystal

I have to agree with the others on this. I'd try them out first on one project. Perhaps 50/50 is not the right split. Maybe it's 60/40 or some other amount. I'd make the split contingent upon you receiving all of your money back for the material cost and to portion of the financing that you pay in interest over the time the rehab takes.

Just my thoughts.
 
crystalwillett
Ambassador
Posted By: crystalwillett on 05/21/2007
that's why I love this group!!! I've never thought about it from his angle.  Thanks for posting your feedback.  My realitor asked me the VERY SAME Question today too.. wow!
 
Colin
AdminAmbassador
Posted By: Colin on 05/20/2007
I have to tag Sean's comments, if you are bringing everything but the labor, my thoughts would be why do a split or a partnership in the first place?

If they're on it, give them a test first. Have them do the rehab as the GC on the deal. Agree on a price to do the labor part of the rehab, be very very very specific on what labor they'll be doing and agree on a price.

If they do a good job than consider a partnership. Beware of partnerships, my attorney told me last week:

"A partership is just like a marriage but without any sex!"

Colin
 
crystalwillett
Ambassador
Posted By: crystalwillett on 05/20/2007
let's say he just does work (and I will hire him for awhile, like you suggested---THANKS--.. what percent is fair?  50/50 sounds like a big chunk to give away, if I'm paying for the house, materials and doing the filling of the house.  Maybe I'm wrong, but doesn't sound like I'm coming out in the end. 
 
RyanDehler
EducatorAmbassador
Posted By: RyanDehler on 05/20/2007

I do this all the time (with people i know) and when i go an fund the deal he does the work and sells it and does all the hard work and we split 50/50. to me. The funds are the easy part. money making money at that point

-Ryan

 
Real Estate Investor
EducatorAmbassador
Posted By: Real Estate Investor on 05/20/2007

Crystal - great question. If this is someone you just met, I wouldnt do it. I meet alot of "great" people who turn out to be something other than my first impression. Some turn out better, some worse. I might hire someone like that, but not partner. You can always fire your labor - but firing a partner will be more difficult. If you want to try this person out as a potential partner, then hiring them for one job may be a good first step. Besides the cost of the labor should be cheaper that 50% of the profit. In other words if you do partner dont do it 50/50.

Just my 2 cents.

Sean