Paying Contractor Based-Off of My Profits?

[Westen O'Brien]

Hi Everyone,

So I'm in the middle of trying to execute my first flip.  I've found a great realtor who has experience flipping houses himself and he connected me with the general contractor that his company uses to rehab and maintain their rental properties.

This realtor has also been giving me advice along the way and suggested I maybe try something I had never thought of before:  he suggested I pay the contractor with a certain percentage of my profits from the flip.  This way I'm only paying for materials on the work he does himself, and he's incentivized to do the work well and quickly so that I can make more of a profit.

Have any of you out there done this before?

If I do this, am I basically partnering with this GC on the deal?

What percentage of the (hopefully) profits would be fair to give the GC? And how do I draft up such a contract?

What are your general thoughts?

Thank you for your time,

Westen

[Max T.]

If I am the GC, why would I trust my livelihood on anything other than the value of my work? Especially since this is your first flip. A whole host of things could go wrong that would affect your profits that have nothing to do with the GC's work.