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Updated over 2 years ago,

User Stats

11
Posts
0
Votes
Hugh Smith
  • Investor
  • California
0
Votes |
11
Posts

Equity sharing contract

Hugh Smith
  • Investor
  • California
Posted

ok, i am starting up a partnership with a friend in virginia to fix and flip houses. 

My partner says we dont need to buy the first house.   He has negotiated an agreement with a friend like this:   

we agree with the owner that the "as is" value of the house is $225,000. my partner estimates that it might take $15,000 to fix up the house including  adding another bathroom.  

when the house is sold we subtract the as is price and the total repair expenses from the sales price.  And we split the profit 60% for us and 40% for the owner.  

But i have concerns about how to write a contract and enforce it.  The owner is  expecting a biddiing war and the sale price will go over $350,000.   But the comparables suggest $300,000 max.  what if the owner decides to hold out ( forever ) for a sales price over 350k.  

or what if the owner decides that we have not done that much work and he just sells the property on his own and gives us some small payment.  i know that contractors can put leins on property for specific amounts owed.   But we can not name a specific amount now because there are two unknown variables- the final repair total and the final sales price.   Can we just file the agreement on the property to cloud the title even if we dont know the final amount we will be owed ?

I have never seen any contract like this ?  

Thanks 

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