All Forum Posts by: Eric Clement

Thank you everyone for the solid advice! 

Thanks Lexi! I do not  know these people well. The broker was also a realty school instructor and the contractor is his realty student. I am the odd man out in a way. I performed a background check on the contractor. As a non-experienced first-time investor, I am not sure how else to experience rehabbing first hand. 

Had a meeting today with a broker/attorney and a general contractor for a house flip. The idea is for a 50/50 split on the net profits between myself(capital investor) and general contractor. I would pay acquisition and materials cost upfront, the broker/attorney finds and analyzes the deal (makes6-8%), contractor estimates all rehab costs & takes on labor risk but makes 50%. This setup is very hands off for me, but I take a majority financial risk and lose a large profit margin due to the contracting partner’s share. I agree with a win-win scenario for all parties.

Can anyone provide me with insights into the following: 1. Is a legal structure required and if so which is the best for this partnership? 2. Is this generally a good arrangement considering I have zero real estate investing experience (been educating myself through BiggerPockets materials)? 3. Any pitfalls or major concerns you can share would be extremely valuable.

Lastly, the broker is recommending a minimum cash on hand amount of $150,000.

Thoughts?