All Forum Posts by: Jason Roberts

The only way to scale it is build your own crew who will work for you at your own suitability. It is not hard to get a crew together, maintaining them is the hard part. And one at a time will not address the problem. 2-4 weeks work every 6 months is not that important business to any rehabber/contractor, you will just be treated as another client.

I started out doing JV flips with private lenders. We were doing a 50/50 splits which was ok for the first few. After a while 50/50 got hard to swallow considering I was bring the deal, managed the subs, dealt with whatever problems arise, etc. Now I will do a 60/40 split but really prefer a 70/30 split. After your name gets out as being successful access to money becomes less of an issue. Get a little dough saved up and take on a hard money lender too. Developing solid relationships is a must in my opinion. Makes the journey more enjoyable and opens up more opportunities as well.

@Jason Roberts,

I agree with the numbers quoted by David Roque earlier are pretty consistent as what is applied here in Central Florida. As a full time renovator/rehabber here in Orlando (and Realtor as well), I currently offer investors 40-50% profit, or 8% interest (six months minimum) for SFHs. The investor's appetite for risk will determine which route they choose.

Having done myself and knowing lots of other people who have done equity partnerships with relatively new investors (as you indicate you might be doing), and with my experience sitting on the advisor board of a crowdfunding company, I would highly recommend having "boots on the ground" in whatever cities you're funding.  Assuming you're providing draws on the construction side of the loans, you'll want to verify the completeness and quality of the work before each draw. 

Notwithstanding the type of investor who is looking to rip you off (which it sounds like you're not concerned about), even the best intentioned new investor can over-estimate his abilities and the completeness of a job.  As all experienced rehabbers know, when you think you're 99% complete on a job, you're typically only about 80% complete.  Newer investors don't typically realize this and can run of cash long before they run out of work.

If you have the cash, you have the deals and you've averaged over 100 deals a year for the past 20 years, I don't understand why you're looking for someone to put $1M to work for you?  Why don't you just use that $1M+ to do an extra 15-20 deals per year yourself?

I've only done about 10% of the deals you've done, but adding an extra 15-20 deals per year (assuming the deals were readily available) would be much more interesting to me than funding another investor in this crazy market.  When you're doing 100+ deals a year, increasing volume/capacity by 20% shouldn't be too difficult, and you'll keep 100% of the profits versus 30-60%.

What am I missing?

 As many as I can find.  These days, I have more money than deals.  And I know many successful investors in the same situation.   If you want a big split, you're going to be working with less seasoned investors and take the risks that warrant the larger returns. 

@Jason Roberts there a two schools of thought.. were as 1 million in most of the better west coast markets is 2 deals at best 3 deals.. most folks will go to HML if they have any experience at all.. Not sure what market you want to penetrate in FLA but I think it would be the same in some of the better markets there were prices are West coast like.

Its hard for a rehabber to do one deal at a time and really make any money.. and or a living if your doing it as second income then I can see that.. if your average deal Is about 6 months cradle to grave and profits are say 20 to 50k for JV partner.. and you pull off 2 a year that's 40 to 100k for a full years worth of work...

the key to doing a JV is getting some volume going then you bring value.. one at a time if that is what your saying your going to do I don't think brings much value except to newer to brand new folks trying to bust into the market.

I can't speak for less experienced Investors, but most successful investors I know with a lot of experience can borrow essentially unlimited funds these days at 8-12%.

Why not just structure as debt and pay a fixed rate with a lien against the property?

What is a fair profit split on a 100% funded rehab flip JV partnership under the following circumstances:

1)  Rehabber who  has limited rehab experience?

2)  Rehabber who is very experienced?

3)  Funding partner will do 1 deal at a time?

4) What % would you be willing to take for access to $1M+ in JV funding capital?