Investor - General Contractor Joint Venture
I'm an investor looking at doing a joint venture with a General Contractor, 65-35 (investor-GC) split on net profits. My cash, his labor. Is this a reasonable split?
What is a typical split for this type of arrangement? Can someone share other considerations to watch out for in this type of arrangement - thanks
need more info- How much cash from you?
how much labor from him?
What state?
I've done 1 like that but it wont help you much, contractor was friend of the family. It worked great for me, I was new, he wasnt. I hung around the job alot so I could learn ( and he couldnt run up the labor clock)
Do you know the general contractor?
Where I am from the general doesnt do crap, he just pulls permits (helps) and then calls his buddies to do the work. If you dont know him from adam, I would just go after each contractor yourself (painter,roofer etc)and learn to pull what ever permits you need.
Good Luck,
Jason
q
I was thinking about doing the same. The guy I want to use is a friend of mine. He will put in no money or risk. My partner and I will bear all of the burden. For this reason, I was planning on giving him 15% of net profits. This may not be a proper either, but that was what I was intending to offer to him.
Hi Rehab / Skydive,
Since I am a GC, let me give you my side.
Some people on this site will trash GC's,
and some of them deserved to be, but not all GC are lazy or stupid. There are a few of us that have quit a bit of knowledge in all fields of construction. Does that mean we should do all the work, NO. A good GC will delegate and supervise the project........... his subs
will work more loyally with him than you.
Many of my subs refuse to work with Harriet Homeowner unless a GC is involved, I dont blame them........I myself can get frustrated with clients that
have no ideal what they want......or worse yet, they want something for nothing.
So many people will pay REI's, lawyers, and RE agents for their knowlegde and time but fail to see the valuable knowledge and direction a GC can give you in regards to your investment.
Most problems can be resolved between a GC and his client by being upfront and honest from the beginning.
The first questions I ask my clients is.....
what is the project and what is their budget. If they are reluctant to tell me than I tell them to find another GC.
If they cant trust me with their money than they need to find someone else.
This is one of the reasons I have set fees..........so people cant accuse me of padding my pockets my raising expenses.
If you have a good and fair GC than he is worth every penny he charges. Im not sure what state you are from nor the requirement or liabilities associated with GC's in your part of the country....but I know my operating expenses are not cheap....even if Im not swinging a hammer.........I still have overhead expenses to pay for.
So for anyone to base his opinion on what a GC is worth by what he does in the field is silly.
One thing I would caution you on.........is doing business with "friends". I have done work for several "friends" whom I have given a good deal.........only to be offended by them asking me for additional favors that cut into my pocket, then get upset when I say no.
I have helped out 4 "close" friends to
build their dream homes..........when we finished each had between 30 - 50k of equity into their homes..........when I asked them to help me with my dream home........3 of 4 had more important things to do.........like fishing or hunting.
If you expect a special deal with this friend then I suggest you do him and yourself a favor and find another contractor......... keep the friendship alive.
Thank you NC_YANK for the sound advice.
Gentlemen,
As a GC myself and after reading the posts. Their is a lot of liabilty on JV deals.
Ask any attonery!! Who pulls the certificate of insurance? 1mil 2mil? workerscomp!Any thing happens on that project to any laborers. The home owner
will be in the deep pockets attack zone!!
Dont let profit blur common sense!