Property in exchange for Contract Work

[Maria Flowers]

I'm sure someone has done this before but I'm having a time searching the topic here.... My husband and I own several properties some buy and hold some rehab. We paid cash for them. We're looking to conserve cash on the rehab process. We've been approached by a contractor to sell one of the homes. I'd like to negotiate a deal where we sell the property in exchange for contract work done at our other properties. Does anyone have experience successfully executing a similar arrangement? Can you share some advice? Thanks for your help.

[Curt Smith]

Hi Maria,  Search here on:  work for equity,  also google work for equity, youtube.   Etc.  

Historically there's been preditory sellers typically in the Northern cities buying up old wrecks selling on contract for deed and work for equity.  Invariably the buyers fail.  They just can't put out the needed cash for major systems upgrades.  Painting sure, replace plumbing, new breaker box, definately not.  They they hit the news, then newspapers pick those scenarios up, I've read many reports of work for equity not working.

But the devil is in the details.   Just paint and carpet, maybe.  98% chance you'll get the house back ini same or worse condition.

Needs plumbing swap, new breaker box, 200% chance you'll get the house back.

I've done note and mortgage (traditional seller finance) and had to foreclose, about $1.5k plus the non-paying months. I also do contract for deed, low closing costs but I strongly suggest you close a CFD at an attorneys office (gives feeling of official and legal,,, which it is).

Have a written contract for performance, quartlerly inspections and penalties if no work or poor quality.

The summary is:  these rarely work out.  but it does kick the can down the road.

Best solution:  REFI cash outof your other cash houses and fix this one correctly and get top rent.

You are looking too closely at cost avoidance and not at what you'd get if you found the cash and properly fixed:  better tenant, top rent.  The later to me is worth the hassel of finding the cash!!!    A zillion percent!   I've done this and shades of gray.  I'd suggest you fix this house and rent to a top renter.