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Updated over 1 year ago,
Sweat equity valuation for permitting and remodeling a commercial building - Help
Hi,
As an architect, I was approached by the building owner to help increase the value of their building and create a cash flow. The current value is 500k (the Owner has 400k ballon in 18 months), and with 150k remodel I believe I can generate about 5.5k a month gross income. I am going to take on the development, permitting, contracting, and marketing of the building to create two live-work spaces.
Since this is my first type of sweat equity deal, I have difficulty realizing what percentage I should take and from which portion (Gains, Full building valuation, Cash flow).
I have two options in this scenario:
1. Sweat equity only, my labor for %.
2. Paying the construction costs as cash.
Wondered what the forum would think about this deal and how should I structure this distribution. I am confident on delivery but pretty new to being on the developer side of things.
Help would be greatly appreciated! Thanks and have a great day!