Free & Clear $700k, ARV 1.6M Owner Finance Collaboration | Help

[Michael Williams]

I have a CASH 4 Houses sign on my car and this contractor called me today about collaborating on a deal. He has a house that is free and clear in a sought after area in Northwest Atlanta. Realtor.com has it listed as $700k & Zillow has it listed as $698k. There is builder activity in the area. The 3 houses next to it are $1.6 million, $1.3 million, and $1.1 million. The one on other side is $985K and $1.2 million. The owner wants $700k and is willing to work out financing, but to get in the game he has to bring $60k to the table. 

The contractor and I talked for quite some time and I found out that he has been in contracting for 30 plus years, so the experience is there. He says that he has built houses of this caliber from the ground up. We also talked about what changes he would make to make to bring it to $1.6 million. It will cost $400k to get it to appraise at $1.6 mil. So that is all in at $1.1 mill, which will bring a profit of $400k - $500k. Worst case scenario $300k.

The house is vacant at this time and he said that there is an arrangement with the form a contract with the contractor who then in turn deals with the owner? Or should all three of us form the partnership and deal with the owner as one entity?

How would you structure it and what questions am I missing?

Really We are ALL IN at $460k, cost to owmer and $400k to upgrade.