Fixing Seller's house before listing

[Tee Lim]

Hi, I'm trying to convince my neighbor to let me fix her fixer upper house before putting it to the market.

How can I make sure that I get paid once the house is sold from a legal and paper procedure perspective?

Basically this is my proposal:

1. I fix the house and cover all the cost up front (but cost will be split after house is sold)

2. Whatever sold price above current market value will be split 50 50.

Example:

If the house is worth 400k as is today, and actually sold for 550k after fixing and fixing cost 50k, then the extra 100k (after fixing cost) will be split into 2 between the seller and me. So seller make an extra 50k and I make 50k.

I'm not an agent. I'm an amateur investor in LA who have done some flips and do own some investment properties.

Thank you!

Tee

[Peter M.]

Write up a contract that states the current value as is, agreed on by both parties as well as the expected repair budget. Have the contract stipulate the terms of repayment the way you did above and have the owner sign a lien on the property for the amount of the budget repairs. Include the lien and contract with the sale contract when it is sent to the title company or lawyers office and they will break it all down in the HUD. You will then get a check from the proceeds for your portion of the repair cost and profit.