- Joined
- Dec 6, 2015
- Messages
- 49
Hello,
I own a plumbing and general contracting company, so I have some business experience. However, I have never paired up on a joint venture and do not have experience in real estate investments. I have personal properties and a couple lots I have purchased in the past, but that's it,so my knowledge is limited.
A past client of mine whom we general contracted a legal basement suite for, wishes to partner up. Our goal is too buy, renovate, and flip (or hold and rent out) homes. I have a few concerns:
1. I am more inclined to hold and rent out for the time being, well having the property appraised and pulling out the equity to tread forward. Especially given the current housing market in Edmonton, I believe it is a good time to acquire and assume real estate thru distress sales and things of that nature but not a good time to flip. He on the other hand is more keen to flip, make some money and move on. He wants the final say, he's the realtor and investor and it would be his capital so I can see why, on the flip side, I have a steak in the homes too .
2. He will be supplying all the money, I do have the ability to access some funds, but it would involve pulling equity of a lot which I have already paid for. I am not willing to do this. Therefore, he invests all the money for the property and I would look after the general contracting duties. Well he would find the properties, crunch the numbers, deal with financing, monitor the budget, sell and market the property. On a side note, I would still need to put a personal guarantee on the mortgage I believe, so we split the percentages down the middle on that.
3. The initial deal he offered me was a 90/10 split which I declined as politely as I could. It actually insulted me. I believe my time, resources, and knowledge is worth far more than that. I responded with a proposal of 75/25. Here is how the deal would shake down:
other party / myself
Capital 50% / 0
Mortgage 10% / 10%
Asset Management 5% / 5%
Real Estate Expertise 10% / 0
Construction Expertise 0 / 10%
total 75% / 25%
I want to ensure that the deal is fair for both sides and that transparency and trust are always present. However, the initial deal he proposed has already given me serious doubts. Any and all feedback would be appreciated. How are these deals normally structured? Am I asking for too much/too little? How should the contract be written? What steps should I take to protect my best interests?
I own a plumbing and general contracting company, so I have some business experience. However, I have never paired up on a joint venture and do not have experience in real estate investments. I have personal properties and a couple lots I have purchased in the past, but that's it,so my knowledge is limited.
A past client of mine whom we general contracted a legal basement suite for, wishes to partner up. Our goal is too buy, renovate, and flip (or hold and rent out) homes. I have a few concerns:
1. I am more inclined to hold and rent out for the time being, well having the property appraised and pulling out the equity to tread forward. Especially given the current housing market in Edmonton, I believe it is a good time to acquire and assume real estate thru distress sales and things of that nature but not a good time to flip. He on the other hand is more keen to flip, make some money and move on. He wants the final say, he's the realtor and investor and it would be his capital so I can see why, on the flip side, I have a steak in the homes too .
2. He will be supplying all the money, I do have the ability to access some funds, but it would involve pulling equity of a lot which I have already paid for. I am not willing to do this. Therefore, he invests all the money for the property and I would look after the general contracting duties. Well he would find the properties, crunch the numbers, deal with financing, monitor the budget, sell and market the property. On a side note, I would still need to put a personal guarantee on the mortgage I believe, so we split the percentages down the middle on that.
3. The initial deal he offered me was a 90/10 split which I declined as politely as I could. It actually insulted me. I believe my time, resources, and knowledge is worth far more than that. I responded with a proposal of 75/25. Here is how the deal would shake down:
other party / myself
Capital 50% / 0
Mortgage 10% / 10%
Asset Management 5% / 5%
Real Estate Expertise 10% / 0
Construction Expertise 0 / 10%
total 75% / 25%
I want to ensure that the deal is fair for both sides and that transparency and trust are always present. However, the initial deal he proposed has already given me serious doubts. Any and all feedback would be appreciated. How are these deals normally structured? Am I asking for too much/too little? How should the contract be written? What steps should I take to protect my best interests?