All Forum Posts by: Michael Sears

Hi BP,

I found a house that will make a great flip and I have it under contract. I do not have the funds to finance the deal, so I have an experienced flipper who wants to partner with me. The total profit on the flip could be around $80-$100k. I would like to have your feedback on the terms and let me know what you think. 

The investor is willing to partner 50/50 with me on the profit... and wants me to pay 9% on half of the money ($170k is my half). Why would an investor want to do it this way as opposed to just doing a different split, like 45/55 or 60/40 with no percentage? It just seems less complicated, but I am not a mathematician. 

The investor has the crew he is accustomed to dealing with and has flipped a ton of houses, so he knows what he is doing. I have only flipped one house several years ago and I do not have a crew. I will be at the house every day, though, making sure things are getting done, as well as finding the best pricing on materials. And, of course, I found the deal. 

The investor does not want to get an inspection and just wants his contractor to look at it during our due diligence period. Since I will now be responsible for $170k, I don't know if I am comfortable not having a legit inspection. What do you guys think?

Thanks!

Hi BP Community,

A colleague of mine has owned a property management business for 10 years. He has been wanting to expand into the area in which I live, and I have been wanting to start my own property management company. He says he will teach me everything I need to know and that I can utilize his software and system and that he will split any business I bring in 75/25 (I get 75). 

I think it would be great to NOT have to build my business from scratch; however, I wonder if I will be kicking myself a year from now, wishing I didn't have to give away 25%. And I am wondering if the margins are already too thin in property management and if giving up 25% would make the whole business not even worth it.

I was the in-house property manager at a few different multi-unit buildings for several years, so property management is not foreign to me. I am pretty resourceful, too, and I have started a few small businesses in the past, so I am not intimidated by the thought of doing it myself. It would be really nice, though, to join forces with a company who already has brand recognition in the area and also has its infrastructure in place.

I am wondering if anyone has any advice or creative input as to how I should structure this new business arrangement. Perhaps I should give him 25% at first, but then decrease that amount over time? My other thought is - what if he wants to sell the company at some point? Or what if I do?

Any advice would so greatly appreciated.

Thanks,

Mike

On BP, can't you just say you're having a get-together with a date and tell people to pm you for details?

Hi BP,

I am partnering on a flip with an investor. He will provide the money and I will manage the rehab. He uses a line of credit with the bank and pays 5% on the borrowed funds. I am wondering how to protect myself in this partnership? Should we form an LLC? Do I have to be put on title?

I would be super thrilled with 50/50. I'm just wondering if that's too much to ask. I have flipped 2 properties before, but mostly cosmetic. 

On this deal, I would be spending time at the property every day, managing the sub-contractors. But my partner has been flipping consistently for 3 years now, so he is more knowledgeable than me, for sure.

Too bad BP won't let me change the title. I see what you are saying. I was on the elliptical when I wrote it, so I didn't realize how the title came across.  I am about to have a meeting with my investor/partner and I know he is going to ask me what I want monetarily for my part of the partnership. I am just wanting to get people's thoughts here on BP so I don't sound like an idiot. I don't want to ask for too much or too little. 

Hi guys,

I have someone who is interested in partnering on the flips with me, and I would like to know everyone's thoughts on what split I should suggest on the net profit. My partner currently flips properties in my town, and is interested in doing flips in other parts of the city, but does not have the time or desire to manage the properties further away. He will provide all of the money and he also has a team in place (attorney, title company and sub-contractors and he is a real estate agent and I am not). I will find the deals and manage the rehab. 

What do you guys think a fair split would be? I have heard everything from a set amount of $2000 per flip to a 50-50 split. Just not sure where we should start. This will be our first time working together, so I am open to starting with me getting a lesser percentage at first.