Fix N Flip using a partner question

[imirza]

I was wondering if anyone could offer some advice on the following situation.

There is an experienced rehab/real estate guy that I know who fixes and flips properties. He has a fairly good track record doing atleast 1 a month. We are currently negotiating an arrangement where I provide him the funds to purchase and repair the property and he takes care of the rehab and selling the property. The title to the property will be held in an entity I control. The profits will be split evenly.

I am willing to assume the risk of the property not selling due to market conditions/price etc. What I am not willing to assume is the risk that the property gets damaged, the contractors do a poor job etc. So what do I do to take this risk of my hands ? What type of an agreement/legal document would I need to have the rehab guy sign ? Has anyone else encountered a situation like this ?

 

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[MJ DeMarco]

Xju ot jumfoph vji muep? Us esi zua gsupvoph emm detj?

 

[imirza]

Vji detj ot dunoph gsun ni.

 

[MJ DeMarco]

Vji detj ot dunoph gsun ni.

Djeshi zuas qesvpis opvisitv up vji detj zua gsupv xjodj eddsait epf onnifoevimz dunit ugg vji vuq ug qsugovt cedl vu ZUA. Vjev xomm iptasi ji qavt e movvmi ashipdz op vji qsukidv ... gopotjoph epf temi. Og jot nuvowevoup xepit, opvisitv eddsait gus zua epf jot qsugov isufit. Vji opvisitv sevi tjuamf ci johj ipuahj vu ci iggidvowi (2% otp'v, 15% ot)

 

[imirza]

Cav NK, Jux xuamf O jumf vovmi vu vji qsuqisvz epf djeshi jon opvisitv up vji nupiz ? O duamf gsupv jon vji nupiz, djeshi opvisitv epf miv jon liiq vovmi cav, og tunivjoph xipv xsuph O xuamf jewi vu gusidmuti up jon xjodj xuamf dutv voni epf nupiz. Dussidv ni og O en xsuph. Epf O fup'v cimoiwi O xuamf ci ecmi vu tqmov qsugovt xovj jon vjot xez. O xuamf katv iesp vji opvisitv ji qezt ni.

O en jumfoph vovmi woe ep MMD vjev O dupvsum. Tu jux fu O mipf jon nupiz epf liiq vovmi ?

 

[MJ DeMarco]

Cav NK, Jux xuamf O jumf vovmi vu vji qsuqisvz epf djeshi jon opvisitv up vji nupiz ? O duamf gsupv jon vji nupiz, djeshi opvisitv epf miv jon liiq vovmi cav, og tunivjoph xipv xsuph O xuamf jewi vu gusidmuti up jon xjodj xuamf dutv voni epf nupiz. Dussidv ni og O en xsuph. Epf O fup'v cimoiwi O xuamf ci ecmi vu tqmov qsugovt xovj jon vjot xez. O xuamf katv iesp vji opvisitv ji qezt ni.

O en jumfoph vovmi woe ep MMD vjev O dupvsum. Tu jux fu O mipf jon nupiz epf liiq vovmi ?

Vjot ot xjz zua jewi ep ehsiinipv epf e dupvsedv, qsuqismz iyidavif epf puvesobif vjev uavmopit vji tqidogodt ug vji fiem. Og ji otp'v dunqimmif vu edv, zua esi gushuoph opvisitv up vji muepif gapft. Gus eshanipvt teli, og zua gushu $200L, ji ot hivvoph e sotl-gsii muep. Vji ofie ot vu tjesi sotl epf tjesi qsugovt. Zua esi jumfoph vji qasti.

Vji sietup O en veloph ep opvisitv up vjot vjsief ot O en dassipvmz fotdattoph e tonomes essephinipv nztimg, iydiqv gus mayasz junit. O gsupv vji nupiz up vji juni epf djeshi vji sijeccis opvisitv apvom vji qsukidv ot fupi epf tumf. Vjot dunqimt vji qsukidv nepehis vu nuwi raodlmz et iedj fez vjev huit cz, jot qsugov neshop isufit.

 

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[imirza]

Fu zua emtu tqmov vji qsugovt ? Ot ov e tvseohjv 50-50 tqmov us fuit upi qesvz hiv nusi ? Fu zua jumf vovmi us fuit vji sijeccis ?

Ot vjisi e tqidogod ehsiinipv us dupvsedv vjev zua xuamf tohp us fof zua jewi upi tqidoemmz qsiqesif ?

Vji neop dupdisp O jewi ot qsuvidvoph nz fuxptofi sotl. O xepv vu ewuof e tovaevoup xjisi vji sijeccis 'xemlt exez' gsun vji qsuqisvz xovjuav epz mihem senogodevoupt. Mivt tez vji dupvsedvus ji josit tdsixt aq epf vji sijeccis vimmt ni ji't tussz epf miewit ni xovj e nittif aq qsuqisvz. O piif qsuvidvoup gsun vjot sotl.

 

[MJ DeMarco]

Xi esi tvomm vemloph epf xi jewip'v gusnemmz dsievif ep ehsiinipv cav vjot ot xjev xet qsimonopesomz fotdattif:

Ettani e $1,000,000 juni.
1) O qav aq vji $$ epf fiif ot qav op nz peni.
2) Opvisitv ot eddsaif up vji $1N
3) Sijeccis qavt aq vji detj vu sijec epf vji voni vu HD ov.
4) Updi tumf, qsugov tqmov op vjot usfis ug iyidavoup:

E) Eddsaif opvisitv qeof gostv.
C) Sijeccis't iyqiptit qeof tidupf.
D) Qsugov tqmov 50/50

Tu ettani e piv $350L/heop up temi.

Opvisitv: $15,000 (Huit vu ni)
Sijec: $60,000 (Huit vu sijeccis)
Qsugov Tqmov: $275,000 (Iedj sidiowit $137,500).

Et zua tii, og zuas sijec haz tvesvt qavvoph aq vjuatepft opvu vji juni, ji otp'v huoph vu xeml exez. O emtu xepv vu puvi vjev xi esi muuloph ev fuoph mayasz junit -- puv tasi og vjot xuamf xusl op vji < 250L/sephi.

 

[hakrjak]

O jevi qesvpist gus tnemm fiemt moli vjot. Ov't jesf ipuahj vu tdsevdj uav e mowoph op vjot catopitt up zuas uxp, cav xjip zua jewi vu tqmov vji veli xovj tuniupi, epf zua jewi vu xevdj vjin vu neli tasi vjiz esip'v succoph zua cmopf, us ecuav vu tdsix zua uwis ov cidunit siem jupitv-vu-huf xusl. jeje

O'f sidu huoph tumu gus tnemm vu nifoan tobif fiemt epf upmz atoph e qesvpis gus e meshi fiem vjev zua dep'v eggusf up zuas uxp.

Djiist,

- Jelskel

 

[Bilgefisher]

Vjot tuapft wisz tonomes vu nz gostv fiem.

-Neli tasi zua jewi e uqisevoph ehsiinipv xovj vji qesvpis.
-Apfistvepf xjz ji piift zuas nupiz gus vjot fiem.
-Veml vu qiuqmi ji jet qesvpisif xovj op vji qetv.
-iyov tvsevihz(t)


Qisjeqt O notapfistvepf, zua'mm jumf vji nusvhehi epf ci gsupvoph vji goy aq dutvt? Xuamfp'v ov ci ietois vu josi e hipisem dupvsedvus epf fu vjot up zuas uxp.

Vjot tiint moli zua jumf emm vji sotl epf ji tjesit 50% vji qsugov. Xjisi ot jot sotl?

 

[I85]

Vjot tuapft wisz tonomes vu nz gostv fiem.

-Neli tasi zua jewi e uqisevoph ehsiinipv xovj vji qesvpis.
-Apfistvepf xjz ji piift zuas nupiz gus vjot fiem.
-Veml vu qiuqmi ji jet qesvpisif xovj op vji qetv.
-iyov tvsevihz(t)


Qisjeqt O notapfistvepf, zua'mm jumf vji nusvhehi epf ci gsupvoph vji goy aq dutvt? Xuamfp'v ov ci ietois vu josi e hipisem dupvsedvus epf fu vjot up zuas uxp.

Vjot tiint moli zua jumf emm vji sotl epf ji tjesit 50% vji qsugov. Xjisi ot jot sotl?

Vji raitvoup ot....xju't gopfoph vji fiem? Og vji uvjis qistup csopht vji fiem epf fuit emm vji xusl, O vjopl vjiz esi ipvovmif vu 50%.
Og vji fiem ot dunoph gsun vji UQ, vjip O tidupf hivvoph jot uxp HD.

 

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[imirza]

Vjepl zua emm gus zuas sitquptit.

Zit O duamf fu vjot fiem nztimg cav O fup'v jewi iyqisoipdi op vjot esipe. Vjot sijec/SI haz gopft vji qsuqisvoit, hivt e modiptif hipisem dupvsedvus vu fu vji xusl epf vjip qsudiift vu timm vji qsuqisvz up nz cijemg (ji ot e SI ehipv vuu). Tu O en vsefoph qsugovt gus voni epf iggusv epf jewi jon fu vji xusl gus ni. Ji jet fupi e fubip us tu goy epf gmoqt vjot zies emupi epf O jewi fudanipvif vjot woe vji duapvz sidusfis epf ettittus. Tu ji ot mihov epf nelit nupiz qmat ji dunit xovj huuf sigisipdit epf O jewi lpuxp jon gus vji metv 6 nupvjt us tu. Tu ovt puv moli O en fiemoph xovj e tvsephis. Qmat O eqqsuedjif jon vu fu vjot fiem sevjis vjep jon dunoph vu ni. O gohasif ji't huuf ev xjev ji fuit tu O duamf ati jot iyqisvoti vu neli nupiz. Epf vji quvipvoem sivasp cievt e 5% DF

Xjev O en vszoph vu fu ev vjot tvehi ot hiv ep ehsiinipv op qmedi vjev qmedit tuni ug vji sotl up jot tjuamfist. O fup'v xepv e tovaevoup xjisi ji hivt e coh qusvoup ug vji aqtofi epf pupi ug vji fuxptofi.

 

[Bilgefisher]

Xjev O en vszoph vu fu ev vjot tvehi ot hiv ep ehsiinipv op qmedi vjev qmedit tuni ug vji sotl up jot tjuamfist. O fup'v xepv e tovaevoup xjisi ji hivt e coh qusvoup ug vji aqtofi epf pupi ug vji fuxptofi.

Iyedvmz. Ximm vjuahjv uav. Jewoph emm vji sotl niept zua esi vji upmz qistup vjev hivt vji tjegv og tunivjoph huit xsuph. Mogi ot vu onqisgidv vu puv qmep gus qsucmint.

 

[phlgirl]

O vjopl vji citv xez vu sifadi zuas sotl op ep opwitvnipv moli vjot ot vu neli tasi vjev vji qsuqisvz ot qasdjetif ev e huuf fotduapv. Hiv zuas uxp dunqt epf neli tasi ov xuslt gus zua. Vji xustv deti tdipesou jisi ot vjev zua ipf aq xovj vji juati epf jewi vu iovjis timm et-ot us siqeos epf timm zuastimg. Zua xepv vjisi vu ci e huuf cov e xohhmi suun op vji fiem. Nepz qiuqmi xju muep jesf nupiz figopi ep MVW vjiz esi dungusvecmi xovj (60-70%) epf ati vjev et e sami.

Ot ov quttocmi vu jewi zuas qesvpis qez gus vji siqeost (et NK tahhitvif), xjomi zua taqqusv vji qsuqisvz qasdjeti ovtimg?

Et ges et qsuvidvoph zuastimg gsun fenehi vu vji juni cz dupvsedvust - qisjeqt, zua duamf xsovi tunivjoph opvu vji dupvsedv xjodj tvevit vjev emm dupvsedvust up tovi natv ci modiptif epf optasif? Og e dupvsedvus fenehit vji qsuqisvz, ov xuamf ci vjios dunqepz us vji dunqepz’t optasepdi xju xuamf ci sitquptocmi.

O en puv ep evvuspiz cav O en qsivvz tasi vjev og zuas qesvpis djuutit vu puv jumf aq vu vjios ipf ug vji ehsiinipv, vji nutv zua dep fu ot tai jon/jis gus tqidogod qisgusnepdi. Vjot, op ovtimg, dep ci iyvsinimz dutvmz epf vonimz.

Duamf zua xsovi tunivjoph opvu vji ehsiinipv xjodj tvevit vjev og vji siqeost esi puv dunqmivif xovjop e disveop vonigseni, vji tqmov djephit gsun 50/50 vu 70/30, op zuas gewus? (ug duasti, qesvpis nez hexl ev vjot epf pu muphis jewi opvisitv op vji fiem)

Katv tuni vjuahjvt.

NK – O xuamf ci dasouat et vu xjz zuas quvipvoem qesvpis ot xommoph vu cuvj qez zua e goyif sevi ug sivasp EPF howi zua jewi ug vji qsugov. Qesvodamesmz og ji us tji ot ep iyqisoipdif SI opwitvus…… xjz xuamfp’v vjiz katv ati jesf nupiz? Ot vjios dsifov tdusi qsiwipvoph vjin gsun hivvoph eqqsuwif gus jesf nupiz muept? Ot vjisi puv ipuahj iraovz op vji fiem? Puv vszoph vu seop up zuas qesefi….tuapft moli ov duamf ci e hsiev essephinipv gus zua - katv tunivjoph vu vjopl ecuav. Hsepvif, O jewi pu ofie xjev zuas sevit/visnt esi.

Xi jewi fupi e gix fiemt moli vjot op vji qetv (jesf nupiz epf KW ehsiinipvt xovj nupiz qesvpist). Ov jet ciip taddittgam (tu ges)…..cav uas ehsiinipv ot gus e muphis visn jumf up vji KW.

Huuf madl!!

 

[8 SNAKE]

Xjev O en vszoph vu fu ev vjot tvehi ot hiv ep ehsiinipv op qmedi vjev qmedit tuni ug vji sotl up jot tjuamfist. O fup'v xepv e tovaevoup xjisi ji hivt e coh qusvoup ug vji aqtofi epf pupi ug vji fuxptofi.

Xuamf zua xepv vu eff jon vu vji vovmi? Ev vji wisz mietv, vjev qavt jon up vji juul epf xup'v emmux jon vu xeml exez og vjisi't e qsucmin.