Building Properties W/other People's Money

I have a builder friend that wants to use my high credit / low DTI ratio and high income to build and sell properties.

Here's the deal typical...

I will basically put the house in my name w/his money. He will build the house and take a certain percentage for profit. Say 10%. I will get anything left that it sells for above that.
Example
The house is built for 100,000
Builder takes 10,000
-----------------------------------------
110,000

House sells for 120,000
I get 10,000

What dangers do you see in this deal? Is this common? Who else has done this?
[ Edited by ddemott on Date 01/15/2004 ]

Comments(1)

  • GFous16th January, 2004

    This is pretty common down here in South West Florida. You need a good realtionship with the builder, he need to open his books to yo etc.

    At the end of the day it come down to trust. Do you home work on the deal and the guy.

    If youhave a high level of comfort with the guy, investigate the market thoroughly. Talk to the RE brokers in the area about how long products like this are on the market, prices, etc.


    If you need help in Madison PM me, I have an excellent friend in Madison with many connections and alot of RE experience ( investor) that may be able to offer some guidance up there.



    Gregg
    [addsig]

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