How do you pay your contractors with an equity position?

[Dustin Frank]

Hello BP, I have a contractor client that wants to start flipping houses. He currently has about $10,000 cash and about $20,000 in credit "Home Depot line of credit for materials." I feel confident in his drive and abilities and have decided to put about $10,000 of my own money into his first flip. The problem I am trying to solve is raising the additional capital and structuring the deal. Let's say i find an investor willing to throw in the remainder and we are able to acquire the hard money loan. How do we figure out how much equity his labor and materials are worth?

[Aaron McGinnis]

Carpenter wage = $xx/hr

Plumber wage = $xx/hr

Electrician wage = $xx/hr

And so on.