Promising Partnership turned Profit sucker!

[Kristel Daugherty]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $200,000
Cash invested: $70,000
Sale price: $425,000

First joint venture / partnership and basically a lesson-churning machine! This was a charming two-story 1930s home that had fallen into disrepair and overwhelmed the previous homeowners.

How did you find this deal and how did you negotiate it?

Off-market deal with a wholesaler.

How did you finance this deal?

he partner found the deal and funded the purchase.

How did you add value to the deal?

Our contribution was getting the work done. We split the profits equally.

What was the outcome?

Purchase price: $205,000
Rehab costs: $70,000
Holding costs: $45,000

Sale price: $425,000
Commissions, Buyer's Closing Costs, our Closing Costs: $45,000

Profit to split: $60,000

Lessons learned? Challenges?

Lots of Lessons! The highlights:
1 - Get the JV in writing.
2 - Know the money terms, even if you're not the money partner.
3 - Track expenses in an easy way.
4 - Lathe and plaster is hard work! ...and so is drywall!
5 - Communication and trust will make or break your partnerships.
6 - Do quality work you can stand behind.