All Forum Posts by: Jonathan G.

@Account Closed the good thing also is he is more then willing to take me through the whole building process and said he would have no problem at all showing me how it all comes together.  I think this will be good for many reasons thus I suggested 60/40 for the first and then 45/55 for the second.  I want him to see that I value his relationship as well as his mentorship.  Most people never get a chance to make a contact like this without paying major dues.

So in the beginning I would of had to come with close to $35,000 down and then he would of built it for $140,000 while I got a loan for $180,000 with the 25% down and then either of sold it for maybe $3,000 more, highly unlikely or used it as a buy and hold, which probably would not of been the best use of my $35,000.  With this scenario I am not putting anything down and we will both split the spread.  Let me know if this makes more sense.  

@Aaron Wyssmann  & @Karen Margrave  Since you guys have experience in developing and contracting, if you have any other advice as to how I can show my value and contribute (and how i cannot contribute by interfering on preferences of paint colors :)) so he sees value in this relationship so it can pave the way for more opportunities down the road, I would greatly appreciate any input on that as well.  Thank you all again! 

@Karen Margrave  & @Aaron Wyssmann   Just got done meeting with our partner and it went great!  We thru a lot of questions at him.  He has tons of spec homes in his arsenal so we will be using one that he is very familiar with, that he understands the costs and timeline.  He is not adding in his contractor fees- all his profit will come out at the end and we will split the profits on the first deal 60-40 (me).  The next deal we will be moving towards a 50-50 split with me providing a lot of the negotiations for lots we have our eye on.  I think we have a really good idea on what will make this a good deal for both of us- beyond the profit.  The plan is for me to sign the loan, but if the bank needs he would cosign.  We will be working to come up with something in writing to outline the agreement. I think this will be a great thing!  Thank you for all your input it really helps.  Looking forward to this relationship! 

@Aaron Wyssmann , Wow, thank you so much for laying out those questions for me.  I am meeting with him tomorrow and will definitely throw these at him.  We are going to the bank together after we talk to talk with a banker that I have a contact with.  

@Aaron Wyssmann thank you very much for your input.  I will ask more about the profit question.  Since you are a builder, how do we ask these questions without offending him and still maintaing a trust factor?  He is the one who approached us because he knew that I found the land for very very cheap and even though I was not going to move on it, he easily could of but he came to me out of integrity.  I definitely want to ask him these questions but I am not exactly sure how to say it.  Does that make sense?

We are so excited by a potential opportunity we were just presented with but we are also new to this area need your advice and thoughts on things to watch out for!

We have a great relationship with the builder of our own personal home we built 4 years ago. The builder and his dad are partners in a local construction company that has a very good reputation in our area. In all our dealings with them and in what we hear, they are men that operate with high integrity. Their company has been growing and they are on track to build 40 homes this year. The builder also has 12 rental properties of his own.

I found 2 open lots in our 25 year old development that have a similar layout to the lot my wife and I purchased for our home. Lots and homes in our immediate area are flying off the shelves. We just purchased our first buy and hold property and are working on that. But when we found the lots I asked the builder to come look at it and give me his opinion on its viability to buy the lots and build 2 homes for flip or rent. He told me the lots looked great and he encouraged me to buy them. After more research, I was feeling a bit intimidated by doing this project all on my own as everything would be new.

The builder approached me and asked if it would be something I would be interested in doing together. The plan would be that I negotiate the purchase of the land (which I did) and then we would obtain a construction loan. He would handle the contraction side, build the home in about 5 months (he has a long proven track record with his spec homes) and then we would market the home and sell it ourselves (he also has a long proven track record with this aspect as well). We would split the profits on a percentage TBD after all the purchase related expenses are subtracted.

This is appealing because we KNOW the neighborhood, we KNOW the market and the demand. We feel great about being able to learn a LOT from the builder in the course of this project that would help us out on our rental and on future deals and rehabs. And of course, the realistic profit we are looking at would be a great deal for us. In a lot of ways this deal would be a comparatively low risk one.

We also have seen the ugly side of legal issues and relationships gone wrong through our day job. We are always working to mitigate and/or lower risk, think all scenarios through, etc. But, we also know that you can't succeed without taking some calculated risks. And we don't want to walk away from a great deal financially and to learn more of the business from someone who has had a lot of valuable experience and can and is more than willing to act as a kind of mentor in the process.

Wanted to throw this out to see what red flags if any you see that maybe we haven't considered! We know there are always potential issues with partners. Would you be scared off by this kind of partnership where our name is on contracts and his construction company is on the line? 

We are so excited by a potential opportunity we were just presented with but we are also new to this area need your advice and thoughts on things to watch out for!

We have a great relationship with the builder of our own personal home we built 4 years ago.  The builder and his dad are partners in a local construction company that has a very good reputation in our area.  In all our dealings with them and in what we hear, they are men that operate with high integrity.  Their company has been growing and they are on track to build 40 homes this year.  The builder also has 12 rental properties of his own.  

I found 2 open lots in our 25 year old development that have a similar layout to the lot my wife and I purchased for our home.  Lots and homes in our immediate area are flying off the  shelves.  We just purchased our first buy and hold property and are working on that.  But when we found the lots I asked the builder to come look at it and give me his opinion on its viability to buy the lots and build 2 homes for flip or rent.  He told me the lots looked great and he encouraged me to buy them.  After more research, I was feeling a bit intimidated by doing this project all on my own as everything would be new.  

The builder approached me and asked if it would be something I would be interested in doing together.  The plan would be that I negotiate the purchase of the land (which I did) and then we would obtain a construction loan.  He would handle the contraction side, build the home in about 5 months (he has a long proven track record with his spec homes) and then we would market the home and sell it ourselves (he also has a long proven track record with this aspect as well).  We would split the profits on a percentage TBD after all the purchase related expenses are subtracted.  

This is appealing because we KNOW the neighborhood, we KNOW the market and the demand.  We feel great about being able to learn a LOT from the builder in the course of this project that would help us out on our rental and on future deals and rehabs.  And of course, the realistic profit we are looking at would be a great deal for us.  In a lot of ways this deal would be a comparatively low risk one.  

We also have seen the ugly side of legal issues and relationships gone wrong through our day job.  We are always working to mitigate and/or lower risk, think all scenarios through, etc.  But, we also know that you can't succeed without taking some calculated risks.  And we don't want to walk away from a great deal financially and to learn more of the business from someone who has had a lot of valuable experience and can and is more than willing to act as a kind of mentor in the process.  

Wanted to throw this out to see what red flags if any you see that maybe we haven't considered!  We know there are always potential issues with partners.  Would you be scared off by this kind of partnership where our name is on contracts and his construction company is on the line?  

This is why I love BP,  thank you all for helping this rookie!

Thank you @Matt G.  maybe i will point that out to my realtor and see what she says.

Yeah not to worried about freezing pipes.