Partnering with a Contractor

[Randi Plevy]

A contractor is offering to JV with me wherein he would rehab at cost and I would come up with the money, splitting the profits. My question for those who have done this is: What tools did you use to confirm that the contractor did not pad any of the costs?

[Michael Hacker]

Here is one strategy I am aware of - the contractor would put together a budget beforehand for your review.  If you agree to his budget then any overages would be at his expense and not factor into the profit split.  That way you don't have to worry about verifying his actual expenses.

You will want to come up with a clear draw schedule tied to specific work completion during the remodel process.  Similar to what a bank would do for a construction loan.