All Forum Posts by: Stephanie Jacobson

I'm late to this party but I thought I'd put in my two cents:

I'm originally from Rochester, but I went to school in NYC and spent four years after that in Richmond, Virginia. Now I'm back and doing business/investing in the Finger Lakes region near Ithaca.

I think New York is just rough all around. From my very inexperienced twenty-something point of view, the economy was so much better in Virginia. There were more jobs, cost of living was lower, taxes were lower, and the people were happier. It was very, VERY hard for us to leave and resettle upstate.

BUT, New York also has its charms. People are patriotic here. Have you ever talked to a Buffalo sports fan? a rehabber in Rochester? one of the young start-ups in Ithaca? People who stay here love it here. They invest in the area, they stick around, they feel loyal to their communities. I'm living outside of Binghamton now, and the poverty here on the PA border us shocking. People don't care much about what happens to local businesses or tending to their communities. Comparing that to Rochester's Lilac festival or any of the smaller events that happen around in the suburbs, farmer's markets, local restaurants etc. is so encouraging. Rochesterians love Rochester. How many people have you seen with the flower logo tattoo? We're patriotic. We talk it up. In Richmond, when one upstater met another, it was instantly all about garbage plates and white hots and the latest Sabres game. Wegmans coming to Virginia was such a huge deal.

Anyway, I think there's a ton of hope for the area, and it will continue the way it has been with locals being encouraged to stay and invest in their own small ways. I'm sure happy to be back!

Thanks everyone!

I like the idea of our time being equal to John's investment, but I'm not sure if we're going to match that value on this first flip. We're very experienced in renovation but the real estate side is all new to us. I'll hold on to that fact for the next one, but this time I'm okay with accepting less profit here so we can learn.

How many times in life are you actually paid to learn something valuable, right?

It just seems like the etiquette of dealing with investors is all over the map. I often hear the argument about how investing in the stock market will ideally get you 15% after a certain number of years, and anything over that or faster is an awesome deal. Comparing to that, this split seems waayyy too high for our investor. But if we can get him on the hook to do a few more, we'll be in a good position down the road whether he makes "too much" money or not.

So if we agree to have draws for our labor throughout the project and have that come out of our third at the end, what happens if we make more from the draws than our share at the sale? Should be prepare something in the contract stating we don't have to pay him back? Or should we pay him back? Ideally that won't happen, but it's best to be prepared for everything, right?

Hi all!

So my husband Chad and I are a design/renovation team and I am very near the end of my licensing course to become a real estate agent in New York, and I've have accepted a position with Century 21. We are looking to flip a property near Ithaca, NY, in the Finger Lakes region.

One of my husband's clients, "John", is a real estate investor (he deals with higher end rentals near Cornell University and Ithaca College) and has seen the work we do. He likes us a lot, and has decided he would like to fund 100% of a flip with us. The deal we last discussed over coffee is that he will bring every cent needed to purchase and renovate a house, and will take 2/3 of the profit at the end. We will take 1/3. He is willing to allow us to draw payments throughout the flip so my husband doesn't need to work at other job sites and can focus all of his time on the house we buy, and he wants us to take that amount out of our share at the end. He wants the house to be in all three of our names.

We're looking to do something simple to start, and our ideal budget would be under $175k for the purchase and renovation. Hoping to sell upwards of $225k (shouldn't be too hard in our region).

John is also interested in starting an LLC with us after this first flip and building a business doing this together.

So Chad and I were thinking the split seems a bit high in his favor. Yes, he's coming up with ALL the money (hallelujah) but we are doing ALL the work, but not just as your run-of-the-mill contractors. We'll be overseeing all work done, doing a huge amount of ourselves, researching materials, designing, staging, etc.. John wants absolutely nothing to do with the rehab, and wants us to manage everything from finding the property to running the numbers to marketing and selling afterwards.

I'm confused about the role of an investor in this case. Is John more like a bank? or is it that he owns this house like a business and we're his employees? An attorney I talked to today was confused about why he's giving us a cut at all. (She was a real estate attorney but admitted she knew little about flipping.) On the other hand, a friend of mine who started with very little renovation experience acts as the GC on her flips and treats her investors strictly as lenders, and has done very well so far.

My feeling is that I would be alright with taking 1/3 on our first deal with John, but only if the cost of my husband overseeing and performing all work goes into John's renovation costs rather than coming out of our share at the end.

What do you guys think? Are my desires reasonable? If so, how do I present my case to John?