J Scott - Author of Flipping/Estimating Book - Ask Me Anything!

[J Scott]

Hey everyone!

First, thank you so much for all the support after my recent Podcast episode and the recent BiggerPockets release of the 2nd Editions of The Book on Flipping Houses and The Book on Estimating Rehab Costs.  I've gotten a tremendous amount of email and private messages with the kindest of words, and I sincerely appreciate it.

Unfortunately, there's been so many emails and messages that I haven't had the ability to respond to everyone, despite my best attempts.  Many of them contained questions -- and I hate not being able to respond to all the questions I get!  So, I wanted to start a thread to give everyone an opportunity to ask questions -- and since I get many of the same questions over and over, I thought this might be a good resource for future questions I may get.

Anyway, if you have any questions about the Flipping/Estimating books, about any aspects of real estate strategies, about investing in general, about running a real estate business (or any business), etc., I'm happy to do my best to answer. 

There are a lot of tremendously knowledgeable people on this forum, so don't post here if you have a question best answered by the whole community.  

But, if you want to address something specifically towards me, this is the place!  Feel free to post in this thread and I'll do my best to respond to everyone!

Also note that I created this thread a few years back -- might be worth checking first to see if I've answered it there:

https://www.biggerpockets.com/forums/12/topics/774...

[J Scott]

Originally posted by @Nick Elg:

@J Scott

I appreciate your willingness to reach out like this and offer so much help and advice. Can I ask what you would expect from a partner in starting a real estate business? 

I have heard you guys talk repeatedly about how you want to find people who have mastered the things you don't enjoy because they enjoy doing things that you don't. 

We should focus on the things that we are really good at, correct?

When you set up the business do you offer to split the business and profits evenly among each person (marketing, finance, etc )?

Thanks so much !

Hey Nick,

First, see this article I wrote a few weeks ago:

https://www.biggerpockets.com/renewsblog/questions...

That discusses what I look for in a partner (and don't look for).  In terms of how I like to split up the business, here are a few rules I like to follow:

- Only give away equity as a last resort.  Too many people are excited about giving away half (or more) of their company in return for someone to help them.  Personally, I never want to give away any of my companies, and only do so if there is no better way to get that help.  For example, I'll always try to hire someone or find someone to work on a contractor basis, before I will give away equity to a partner.

- There's no reason to give 50% to a partner unless that partner is contributing 50% of the knowledge, effort and expertise to the business.  Too many people think you need to have equal partnerships for things to work, but that's not the case.  Figure out exactly what each person is bringing to the business, how much time they'll be spending, and then work the percentages from there.  If one partners is mostly going to be doing things like sales or acquisitions, perhaps give that partner less equity, but give bonus/commission incentives to do their portion of the job well.  I've had plenty of partnerships where the splits were not equal.

- The more partners you have, the more headaches you'll have.  Never have three partners when two will do.  Never have four partners when three will do.  Too many people say, "Hey, let's all start a business together, and think that more people will make for an easier business/partnership.  That's generally not the case -- more people generally makes for a more complicated business with higher overhead and less getting done.