All Forum Posts by: Troy Zapp

My advice isn't so much about partnering with a GC as it is partnering or doing business with a friend. In short, I'll never do it again unless the relationship began as a business relationship that later evolved into a friendship and even then I'd be very selective. Over time, our relationship evolved to a point where every conversation mentioned the business in some capacity. Resentment happened on both sides where both of us felt the other wasn't holding up their end. I could go on but ultimately it very nearly cost me one of my oldest friendships. We were both relieved when we ended the arrangement and it took us a while to get back to the old ways.

Let me ask you this: What happens later on when you have enough experience that you no longer need your friend's expertise and also have enough experience to make larger margins in your flips? Now you're overpaying, maybe substantially, for your GC. How will it affect your friendship if you decide to go out on your own? Would you still use your friend as your GC and just pay him his regular rate (and would they be happy about the new arrangement)? What happens if you decide to stick with your partnership and now you're overpaying for labor? Will you begin to resent them or want to change the split? Again, how does that play? You're the money guy in this relationship according to another comment. What if you decide you can beat your flip returns in something more passive that is maybe lower risk because you're splitting profits but your friend now relies on the income from the flips as somewhat steady income?

I'm not saying any of this will happen, but it absolutely can. Best to think about it and talk about it now before you start down that road.

Partnering with your GC can be beneficial, especially if you're new to flipping. Sharing profits with your GC can give them extra incentive to do quality work and stay on schedule. but it's essential to have a clear agreement in place to avoid misunderstandings. Some potential downsides include giving up more profit and possible disagreements on project decisions. It can be a good long-term relationship if you find the right partner, but be sure to do your due diligence and ensure everyone's goals align.

This is a great idea and you should partner with your friend GC.  You asked about %.  Since he will construct close to cost and taking a risk also, I would structure at 50/50. Will also motivate him to want to keep working with you.

I wouldn't enter into a partnership, but would suggest a JV agreement drafted by an experienced real estate attorney. A very well detailed and agreed to contract with all contingencies spelled out. That includes exit strategies and a thorough understanding of risk.

Agree with @Nathan Gesner. Beyond that, I used to do this and was the General  Contractor side of the deal. My money patner (and friend) provided all of the money. I did everything else.......the legwork to find the property, I purchased it, I used my crew and subs to do all of the necessary work, I got it on the market and sold it.

The split was 50/50, and sometimes slim or even a loss.

Think about how this scenario would work for you. It definitely can work, but as Nathan said, there must be a very good relationship between the partners!