Contractor partners up with broker

[Nhi Nguyen]

Hello PBers.  Hope you all have great results on your RE endeavour this first half of the week.  I personally didn't gain anything financially, but got some exciting things to think about.

Besides the multi-division lot I was talking about the last couple of days, I ran into a broker I used to remodel his flips with a couple of years back.

He has lots of deals for sure, and more than 130 agents in his 2 offices spanning the South of the Bay Area here.

He used to get 2-3 bids from a small group of contractors for each flips.  None of those contractors have experience in new construction and commercial.  Now his company plans to add an in house construction arm specializing in his flips, specifically new developments.

So his idea is to partner up with me.  My roles would be to head the construction side, hiring new crew members.  He would be responsible for getting all the deals.  All funding is from his existing group of investors who have been with him for all these years making a lot of $$$!

Roughly speaking, I would manage the crew to either fix or build at cost, with the help of his existing project manager (who would report to me).  I would receive basic pay, plus a percentage of the profit for each project.

Seem to me he also has one more partner, who's been with him all these years.

Questions are:

- How does it sound in general?  Notice that I still have my current crew working my flips/builds for me separately.  They need very minimal supervision, since all the guys been with me from start (8-12 years).  My brother-in-law is helping with running materials from time to time (who is also one of my full time guys).

- How should I get paid (basic)?

- What percentage should the profit be for me?

- How the partnership should be structured?

Tomorrow, I'll be looking at 2 houses, then pick one to try out the model.  After checking the houses, I'll meet with both of them to discuss in details, maybe right around noon time - PST.  So any input is greatly appreciated.  

Thanks in advance.

[Karen Margrave]

@Nhi Nguyen  I can see where that would be a very enticing offer. However; it also seems like it's a big change from what your experience and business model were. 

The questions I would ask myself are these:

• Do you want to work for other developers building their projects?
• How many jobs at a time would you be running?
• How many jobs for others would it take to be able to make the same income if you were doing the projects for yourself and keeping all the profits? Does it make sense?
• Exactly what will be required (will they do permitting and you strictly construction, or?)
• Who handles payment to subs, suppliers, etc. (You or ?) 
• Do they have subs lined up they work with, or do you need to find them? If it's you, do you have access to the number of subs that will be required, etc? 

It may be a great opportunity. It also may be something that pulls you off what you were trying to accomplish. Weigh all the pros and cons. Good luck!