Questions About A Deal
Okay, here's the deal.
While talking with a friend of mine a few months ago, I mentioned that I was considering building a custom home as an investment. My friend, who is a real estate investor, said that he would be interested in doing the deal together.
He said that he had done this before with another person and it had been a good deal.
This is how the deal was setup and presumably how our deal will be setup. I will meet with him in a about a week where I will find out all the details.
1-The investor will purchase the property.
2-The investor will finance all construction costs with cash or bank money.
3-I will build the home without pay.
4-Upon completion of the home, I move in and live in it for 24 months mortgage free. At the end of 24 months(capital gains purposes), the home is listed for sale and the profit is split 50/50.
I guess my question are: Where is my downside? What are some risks that I need to be aware of? What questions should I be asking?
I know there are some legal and tax implications here.
Any advice you pros can offer would be appreciated.
I'm sure there will be questions - feel free to ask.
Thanks,
Bret
from what you've wrote, because you supplied no numbers to compare, the deal looks good but i would want to put a pencil to some actual numbers before i would commit to telling you "to go for it!"...kenmax
Here are some numbers.
Lot cost = $120k - 160k
Construction cost per square foot = $85 - 95
Home size = 4,000 square feet appx.
Homes in area currently selling for $140 - 150 per square foot
Thanks