What would you give the seller?

[Steve Mikrut]

I have a seller who owns a property free and clear. The house is wrecked and the seller doesn’t have the time or $ to rehab the property.

I'm considering doing a JV with him since it's a family friend. He owns/holds the property and I will put up the $ and time to get the work done.

In this scenario, what would you offer the seller over and above what the home is worth in its current condition?

[Alan Grobmeier]

@Steve Mikrut, you will probably find out how good of a friend of the family he is after this transaction.  ;-)

In all honesty, I would not give him a dime.  He owns it 'free & clear'.  Come up with a 'baseline' number, say $50k.  Then determine the split of $$$ over 50k.  Since you are doing the work and have the most to lose, I'd go 75/25 or 60/40.

Property sells for 100k (example).  He gets his 50k 'baseline' out of it plus 25% of the remainder, 12.5k.  You get the remainder @ 37.5.  

With this type of deal you need to be able to agree with him on sales price, how long on market, etc., or you could easily get screwed.

Hope that helps!