Structuring a Deal to include my contractor?

[Ming Lim]

Hi BP!

As I continue to grow my BRRR strategy, the risk I'm taking on the renovation side is ever increasing. Some of the renovations I'm looking at are well into the $300k range, which for a small time guy like me, is a fair chunk of change. I want to bring my contractors in to the investments with me, so they have some skin in the game too.

Does anyone have experience in structuring deals which include their contractors? Do you have them on title? Equity partners? Profit sharing? I'd love to hear strategies that have been successful for other investors as well as those that have not worked!

Cheers,

Ming

[Michael Hayworth]

I don't know the Toronto market, but in the markets I am familiar with, good contractors stay very busy right now. I'm trying to think about what scenarios would make me consider entering into a deal like that, and I can't really think of one, unless it was structured so I'd make a whole lot more money than I would make by charging my normal rates. And if there was some significant risk, I'd pass and just move on to another project.

My company doesn't take investor work anymore, but when we did, I would occasionally have clients who wanted me to enter into some very complex arrangement. It never seemed to make sense to me when I typically have all 8 of my crews booked out pretty constantly. If I'm going to take risk, I'll do it on my own investment properties.