Fix-up Home For Sale, Don't Buy It
Has anyone ever partnered with a selling homeowner to improve their property for them before the sale? I'm proposing to establish what the house is worth at the start and split the profits after reimbursing my rehab costs. In this way I can avoid paying closing costs, commissions, carry, down-payment etc. Why should I buy the property to do the same rehabs and then sell if I can take some profit on someone elses property? Is this a crazy idea?
Any insight appreciated.
Ian
[ Edited by wheeler on Date 11/14/2003 ][ Edited by wheeler on Date 11/14/2003 ]
I've never done this myself, I have a few reservations about this, however. I would definately have a contract defining the responsibilities and compensation of both partners. A very specific Contract stating how you gain equity in the property, and how you are to be compensated in the event that the current homeowner changes their mind after the house is nice. Etc. I believe that a Equity Share Land Trust that names both the seller and you to be the beneficiaries, and a third party independant trustee to hold title should do the trick with regards to ensuring that everyone gets paid correctly and timely upon completion of the project.. You might insist on amending the trust agreement incrementaly as the project is completed, that way neither of you gains an unfair equity advantage as the project moves forward.
Keep looking for more advice on this, I'm interested in finding out how this turns out.
Thanks,
Jeff
ACE means "avoid costly entanglements". Good advice on this proposition.