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Updated about 10 years ago,
Managing a Contractor/Partner in a Fix and Flip
So guys I need your opinion. I have been in real estate for a couple years and for a long time had a partner that dealt with the construction side of having real estate. In the last year i have been dealing with a property I have alone. It is a older house (1800s) in the need of some major work. I had hired several contractors and also had several people I know work on the property. It is a never ending project and everything seems to cost more, take longer and need 1000 more things done then I thought. This is my first property I am trying to do a fix and flip. And I will admit, my lack of knowledge of projects and what they should cost and managing contractors is hurting me. I decided to partner with a guy who has a construction company and can manage all the contractors. He is someone I have known for a few years. We decided to split all expenses 50/50 and also profits. It has been a few months and I have had a couple issues with him. First of all my house is coming along very slowly, it seems that my house is his least priority. We have talked about this several times, and while it has gotten somewhat better, I don't know how to hold him accountable better as far as timelines. Secondly we are doing some major projects like new furnace, roof, painting exterior of house, etc. He has told me that the hispanic crew that is doing the roof he always pays in cash. The problem is if he tells me the roof is going to cost 3k, and we both pay half of that, how do I know he's not really paying them less-saying 2500? Because of this I recently double checked him with the guy who we were hiring to to get and install a new furnace. When I asked him the price it was 200 dollars less then my partner contractor had told me it was. He also was trying to negotiate cheaper prices on his other properties because of getting the furnace at mine. I have not yet confronted my contractor/partner about finding this out. I don't know what to put in place as far as checks and balances to be sure he isn't making me pay more of the expenses? Any advice or input would be greatly appreciated!