All Forum Posts by: Scott MacComb

I am doing my first true house flip (have remodeled plenty of houses for rental) and am trying to figure out a contract to use with a new general contractor whom I have not worked with previously.  After hearing about, and personally encountering some horror stories of disagreements between homeowners and contractors, I am wanting to establish a clear contract to use with a new general contractor.  My only goal is to have all the details clearly spelled out so we can adjust price and deadlines in a fair manner as things come up.  Does anyone have a good contract or outline of terms they like using with contractors?  The one I am speaking with currently has not offered up any sort of contract so I am taking the lead on preparing something. 

I've also been considering this as an idea for generating cash flow with minimal capital outlay. The concept is the same as the hotel industry where many hotels are owned by a REIT/Landlord who leases it out to an operator/manager. The operator/manager runs the business while the landlord receives a fixed rental income or even some percentage rent upside. Similarly, by renting out their house to a STR operator, the landlord receives secure rents rather than taking on the heavy lifting of operating a STR. If the STR operator (master tenant) is really good at running STR properties, they can generate more revenue than the LL might have done on their own.

What are some of the key lease provisions people are using? Termination right if STR no longer allowed, profit sharing, purchase option or ROFR, length of lease and lease options, how to handle major repairs, who pays initial investment in upgrading property, etc.

P.S., this is also similar to co-working locations where the operator signs a master lease with the building owner and then rents out cubicles to individual customers.

I am looking forward to meeting some people doing real estate investments in Arizona and elsewhere. My wife and I invest with cash and/or with our retirement accounts. Open to buy/hold, flips, hard money lending. So far we have just done SFR homes, but looking to eventually work up to small commercial projects (multi-family, storage, hospitality).

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $210,000
Cash invested: $57,000

Purchased to hold for rental income. Home has appreciated considerably.

What made you interested in investing in this type of deal?

It was a newer subdivision and the builder had pulled out due to the Great Financial Recession of 2008. There was still no builder when we purchased and only three of the community streets had been completed. We figured in time the subdivision would be built up again.

How did you find this deal and how did you negotiate it?

MLS listed well below market. Offered above asking price, but still slightly under what we figured market to be.

How did you finance this deal?

Traditional 30-yr mortgage with 20% down.

How did you add value to the deal?

Full renovation in 2023 and re-leased at higher rate.