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Rights To Property??

kaceyv profile photo
  • Tuesday, May 18, 2004 @ 08:13 PM EDT
  • 2 Comments

Here is my current situation:

I purchased a foreclosed 2 unit property for $10k. Approximate rehab costs are going to cost me about another $8k I have paid for everything this far (55K ARV).

Two contractor(s) acquaintances not friends are going to be finishing the work to get the place rent-ready. The deal is that I will pay for everything that is needed and I will refinance the property and split the cash-out (minus all costs I have incurred) evenly between the three of us... I had a meeting with the contractors last night to discuss logistics of the rehab and contractor "B" wants to buy back 50% right of ownership by paying me 50% of my total costs.

Here's the thing.. I don't feel too comfortable with that deal. I spent the money, I took the risk that it would be a successful deal, I lined up the resources (electrician, permit..etc.) and now that it is a guaranteed money making deal, he wants to buy back half of the property. Seems to me, that if he wanted to go in "halves" on the property he should have put money in up front and assumed a portion of the risk. Or to buy in now, he would need to pay 50% of it's current value.

Am I incorrect in my thinking or is it justified. If it is justified can you suggest a tactful way of breaking the news to Contractor "B". ---As an aside, Contractor "B" is not always up front and has been known to take advantage of people and situations and I am trying to make sure that doesn't happen in this particular situation.

I know that even splitting the profit 3 ways I have already over paid for the services that are going to be delivered... I am "ok" with that, it is my first deal and I am learning during this whole process... but the whole buy back idea just isn't sitting right with me. Any thoughts or advice is greatly appreciated.

Comments(2)

  • no photo
    active_re_investor18th May, 2004

    You are certainly thinking clearly from what I can tell.

    1. Dump the guy. Or at least put the fear of god in him that he is about to get zero out of the deal.

    2. Consider why you are dealing with someone who is known not to be trustworthy or fair.

    3. Yes you are sharing more then you need to but you already have factored that in so no problems there.

    John
    [addsig]

  • no photo
    kaceyv18th May, 2004

    Thanks.. there is only two reasons that I am dealing with this guy and that is because:
    1. No money up front for his services
    2. This guy does excellent work... can build a house from toothpicks if given enough time.

    Thanks for your response, I just wanted to get an unbiased opinion.

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