Have you ever partnered with a contractor for a flip?

[Dennis Soto]

Hi all,

I am a New Jersey realtor and recently approached a contractor I know personally to see if they had an interest in partnering for some house flips. I have an LLC I would like to utilize for the purchase of the properties and he has an LLC for his construction business. The plan as discussed is we would use HML to fund the project. We will be splitting the cost 50/50 and splitting the profits 50/50 as well.

My question is: how to best manage the construction portion of the cost? Should the contractor make a profit off the construction as if it was any other job, or should he just bill labor/materials since the cost will affect the overall profit?

In addition, should I as the realtor waive my commission as that will also affect the overall profits?

Thanks in advance for any guidance.

[Matthew Paul]

The contractor should charge his regular price . He could be on another job making his normal profit . His contracting business cant operate just covering labor and materials . 

Your commissions on the sale would they be thrown in the pot and you only get the same hourly rate the contractor charges ?