Investor wants to start flipping and hire me for the construction

[Jason Thomas]

I am, Jason, the owner and sole manager of J Thomas Construction, LLC based out of Gulf Shores, Alabama. I approached a friend about a year ago about wanting to find someone to partner up with and start flipping houses. Let's call him Larry. Larry said that he was about to start a small 3-unit development and wanted to bring me in to do some work. I did. It has been about a year and we are now calling for a final inspection and CO this coming Tuesday.

     Yesterday, he came to me and said "I am interested in moving forward with the flipping thing we talked about and have a proposition for you. I have about 5 houses I am ready to buy, rehab and flip starting after April. The profit margins are about $100k each property. I am offering to pay you $25 per hour and 10% of the profits." I told him I would think it over. He pays all expenses, I get a check each week and a profit share at the end.

     Here's my problem. I normally charge about $45 per hour for my time, management and supervision on projects or a flat weekly rate that amounts to about 50 hours per week @ $45. I also take on remodels, additions and other building projects that are hard price, cost-plus, etc. I have contracts and deposits for 2 complete demo and remodels that will keep me, my guys and my subs tied up for the next 6-8 weeks. Larry knows this.

     I would very much like to do these projects with Larry and even expressed this to him, but, also stated that I am trying to get myself into position to do these types of projects on my own without any outside financial contributions. The idea of a steady weekly income ($1250 =/-) with quarterly(ish) $10,000 bonuses sounds appealing. But, I can go make in 6 weeks or less what I would be making off of this deal in 3 months with Larry if I just keep doing my thing. 

     I guess here's my question or request for input: I think that his proposition of $25 per hour and 10% is low. Really low. He is the type of person that would be constantly coming onto the job site, pulling me off of what I was doing, wanting to make changes, do things out of sequence, cause things to take longer, etc. I have building for over 25 years and this is his first foray into building. He needs my experience, expertise, attention to detail and management skills. But, he also wants to control everything and micromanage. That's why the 3-unit development were on now has taken almost 2 years instead of 9 months.

     Anyway, I bring to the table 25 years of building experience, experienced help, management, supervision, knowledge and focus on superior quality workmanship. He brings a checkbook and some headaches. Don't get me wrong, he's a great guy, but a pain in the *** to deal with sometimes. I would really like to get a deal put together with Larry but I'm thinking more along the lines of a larger weekly/hourly rate and a higher percentage of the profits as I am going to be tying up myself, my guys and my time that I could be out doing other projects and making larger lump sums in profits.

Any help or advice from you guys is welcomed and greatly appreciated. - J Thomas