home imrovement company propositions

[Luis Montanez]

Hello BP family,

Questions up front. Is this a good idea? Are there REI actually doing this? anything else to include in the contract to ensure I get my money back?

Story:

I been out of REI this year since i believed housing was getting expensive and dicided to make money with new home improvement company I created to service homeowners and businesses. We did good this year but this type of business gets slow during winter.

Idea: I was thinking of reaching out to homeowners that are currently in the market to sell (FSBO or MLS) and are selling within big discount because needed home improvement and they dont have the money to repair so they could bring the home to its full market value.

propositions : i can offer to do the full renovation (with the help of my appraiser) with my own money and will draft a contract with homeowners to get paid when the home sales. My payment will be the difference between the currently home sell price and the actual sell price after renovation.  

To protect my self i will place a contractor lein on the house to ensure i get paid at the time of sale. Ensure ensure i put language in the contract that i will have a say on the sale price, estan establish a service cost in case they brake the contract and establish a purchase price in case  we dicided to buy it if it doesn't sale.

[Chris Seveney]

I thought of this in the past and it's riddled with issues. First if the owner decides not to sell you will spend legal fees to get your $ back and if they do not have it, yes you lien the property but they are not forced to sell. Also who will determine existing price ? Say house is valued at $100k and you put $50k into it - they sell it for $145k you lose out on the deal. Also you would need to do research to find out mortgage remaining etc and run title checks on the property because again - if there is a mortgage that gets paid first.

When I looked into it- it was just too risky - your Better off buying home to fix and flip since your already funding the renovation and with hard $ you can probably get renovation done and buy home with less out of pocket