All Forum Posts by: Dell Schlabach

@Dell Schlabach EXCELLENT POST the higher end in any market is very subjective to the thin buyer pool... not uncommon for high end homes to sell for 50% of ARV.

its one reason banks require so much down on high end home

 If I had a quality contractor, that does good work who I can trust. I would offer number three in a heartbeat. 

I like the idea of him wanting to bring another contractor in to speed up the process, and he didn't ask for a 33/33/33 split. 

I have two partnerships like that with contractors right now, as well as our own team. One partnership for almost two years and one about 9 month, and we are testing another one right now, so far they are working well. 

I do put the cost of money is as an expense before we do the profit split.

 If I had a quality contractors, that does good work that I can trust. I would take offer number three in a heartbeat. 

I like the idea of him wanting to bring another contractor in to speed up the process, and he didn't ask for a 33/33/33 split. 

I have two partnerships like that with contractors right now, as well as our own team. One partnership for almost two years and one about 9 month, and we are testing another one right now, so far they are working well. 

I do put the cost of money is as an expense before we do the profit split.

Hey guys,

Here is an example of my first deal I am looking to do. I mainly need advice on which route to take with my GC, who is my father in law.

I proposed to him 2 scenarios. and he suggested a 3rd.

Initially I came to him with this idea. I want to get into buying and flipping and he would be my contractor. so I would put up all money. secure a mortgage, carry the holding costs and I strictly pay him to do the work with my own money. then When I sell I recoup all profit. another option I suggested so we could pay cash would be if we went 50/50 on everything. (he puts up cash or line of credit) and we split profit at the end. so he suggested a little different of a 50/50 split which I am unsure about? So I would put up all money (mortgage, material, etc) no labor cost. then when we sell we split all profit after I get all money I put up back. so he puts up no money but gets paid when we sell. also he would bring in another contractor as his partner to help with work. so his idea was when we sell, I recoup all money I put out of pocket and I would get 50% of profit and he and his partner split the remaining 50% at 25%/25% for doing the work.

Example of a deals S price range I am looking at.

50-60k purchase price (hopefully cheaper) of a row home/townhouse in suburb in Delaware county area Philadelphia

Full renovation

35-50k in renovation costs (that would be with labor included)

total in and out costs roughly 90-110k and comps are 130-150k (these are all general numbers, not a specific deal.)

so my question is which route should I take with him and is his proposed "50/50" deal fair? I understand if I pay him per job I have a higher risk and higher reward. and he gets paid regardless. and worst case scenario I rent it out if I can't sell it for what I want. the other side is if we are all invested then nobody gets paid until we sell.

any advice would be greatly appreciated it. thank you.

Thank you Dell,

     I Have actually been listening to Dave Ramsey for the past month. I love his testimony, and how he corrected his lifestyle. It is just so time consuming.  We are working on baby step two. However, I don't know if I can make it through paying off the house before I invest in Real Estate. I fully realize now that my first business is our home, and until it is profitable nothing else will be.

We are looking for small multifamily, with an eye towards commercial apartments. Truth is I am 37, and my original goal was to retire at 45. I'm feeling the pinch.

This was my 1st flip. It had a foundation issue so I arranged for the foundation contractor to come to the site with me on the day of showing and he gave me a bid on site. I did a complete rehab on the property. 

@J Scott

 There really hasn't been any good arguments for flipping over the other two, from a risk stand point.