Commission Based Rehabs? What is this called?

[Braden Boggs]

First time posting!

I was talking with an agent in our office about investing strategies the other day when she mentioned something new to me. I am here to ask if anyone else has experience with this or can point me in the right direction. Let me breakdown two examples.

EXAMPLE 1
Here is a simple breakdown of a fix and flip I am looking at.

Purchase Price: $75,000
Rehab Costs: $35000
ARV: $180,000
ROI: 63.6%

EXAMPLE 2
Now this new strategy I have learned about would break down the same deal like so.
An agreement is signed by the owner and investor where the investor agrees to rehab the property and the seller agrees to sell the property after the rehab is completed.
On the sale of the property the investor is to receive back his rehab cost and an agreed percentage or fixed price of the total sales price

ARV: $180,000
Rehab Costs: $35,000 (Paid back to Investor)
Commission to Investor: 20% ($36000)
Net to Owner: $109,000
Net to Investor: $36,000
ROI: 102.9%


Based on the ROI, the second example seems to be a better investment, especially for someone who doesn't have a ton of capital to start with.

Does this strategy have a name? Can anyone help me understand exactly how to implement this strategy? I don't even know where to look for more information.

Thanks!