Need Formula For Labor/time Vs. $$$
My brother and I are going 50-50 on an income property that is a fixer. He made it clear from the start that he is not the least bit interested in being involved in the re-hab work. He is more than happy to write checks, being more or less a silent partner.
I've restored my vintage home over time and like being hands-on, selecting materials, etc. Also, I live nearby and have a free-lance job which allows for flexibility in my schedule, making it easy to be on-site daily and supervise the labor. I'm very much looking forward to it, in fact. Looks like there's about a month's worth of work here.
Does anyone have a formula or any ideas regarding how to make this an equitable division of labor vs. funding?
Thanks!
Having done some construction and apartment maintenance over the years, I would suggest an average of what you current contractors get an hour.
Here in the Phx market prices can vary a bunch, but I have found a good average in the $65-$75 per hour range.
Remember, it's going to cost something whether you do the work or you hire it out. Your time isn't free!!!
Good luck!!!
Ryno
I think I should have been clear about this: we will be hiring tradesmen and laborers to do the bulk of the work - there is some demo, as well as skilled labor: needs a complete re-pipe, re-wire. We will be replacing fixtures/cabinets in the kitchen /bath, fencing, landscaping/irrigation, etc.
I have great taste and design skills, am handy with a paint brush as well as with a miter saw & hammer, but am also a 40-something year old, 5'2'' woman. We see my role as designer/contractor. I will be selecting all materials and be on-site much, if not all of the time.
I wanted to explain this in a bit more detail in case it appeared that I was going to be doing it all. Certainly, I'll be doing a lot, but not all...
Thanks again for any input!
Traditionally if someone is just putting up the money and doing, absolutely nothing else (as in, not finding the properties, not even stepping foot in them ever) they would be considered an investor. (Hard money lender) typically they get 1-5% origination fee, and 12-16% interest.
If this is just business ask yourself, what would it cost me if my brother decided to back out and not be involved. If I decide to continue in this business what would it cost me to replace his participation? If his participation is just funding then to replace him would be getting a hard money loan with 1-5% origination fee, and 12-16% interest. So that should be what he gets from the deal.
However, since you are family, that usually changes everything since pure business relationships rarely exist when your partner is also someone you sit across from at the X-mas table.
The point is that there will be no hard and fast rules, it will come down to whatever you two agree upon that you feel allows you to sleep at night.
Take for example if this was an on-going business that had a life of its own and you decided to sell it, an attorney who analizes the structure might think that one of you was touched in the head for agreeing to the profit arangement all those years, but there is more to it than that, you have a relationship and you are in this for other reasons, you both are getting a satisfaction from what you are doing and also working together.
[ Edited by The-Rehabinator on Date 12/02/2003 ]
Decide on what is equitable for you both.
I would track your hours at a minimum. Here in Oregon a realistic hourly wage for a contractor is $35 most states are within 15% of that.