Interesting Deal; Homeowner is My Partner

[Edward Kozic]

I have a potential deal here in Branchburg, Somerset County, NJ.

Brief History: The property is currently FSBO and has been that way for a little over a year now. The owner tried to rehab the house when he first purchased it at an auction, but didn't get very far and has gutted the place to the studs for the most part. I had offered him $125K but he will not budge below $200K (what he purchased it for). I came up with an ARV around $360K, but homeowner thinks its closer to $400K. Thinking the deal was a bust and about to hang up the phone he did mention another option.

He wanted to joint venture on the deal where he would hold a mortgage note on the property and I would provide the funds for the rehab $90-100K and manage the work. In a perfect world, I would take profits at closing, everything above $200K. 

I know there are issues and I would have to get a lawyer involved to ensure who pays the mortgage, taxes, utilities, what price do we agree to sell this at and what is the minimum offer we will take, etc. but has anyone done a deal like this? Are there any other creative financing opportunities or underlying issues that I'm not seeing.

Look forward to your input!

Ed K.