Is This An Idea That Could Make $$$?
Hi all,
I just had an idea pop into my mind where when assigning the deal to a rehabber, we, as the assigners, could partner with private individuals who want a good return on their money to put up the cost of the rehab project, so there is no $$$ out of pocket for the rehabber in terms of rehab costs (they would still be purchasing the property itself).
Would this kind of situation allow us to share in the profits that the rehabber creates by retailing it after fix up? Profits that can be split in some way between assigner and rehabber, for the assigner to then split profits with the private indiviudal lender?
Example:
I contract house for $90k
Assign to rehabber for $100k
Rehab costs are $40k
Holding/Selling costs are $10k
Retail price sold is $195k
Here there is $45k profit, private individual put up $50k, rehabber put up $100k (of which I made $10k right off the bat).
Is this an idea that can work in the real world of assigning/flipping and why or why not? Thanks! - Dave
Rehabbers do this with Hard Money Lenders and Private lenders all the time. The numbers that you gave are actually pretty close to being able to make this happen.
Take ARV (After Repaired Value) multiply by 7/10, subtract repairs, holding costs, and you know the max that a rehabber would be able to pay you for the deal. Subtract your target profit from that, and you know the most that you should pay for the property.
Good Luck,
Jeff