Contractor Thinking About Fronting Rehab $ And Labor
I am thinking about providing upfront $ and labor for investors doing rehabs for quick flip. This would be in return for an interest in the property at sale. Any market for this? I'm just getting my feet wet in the REI thing so any comments or advice appreciated.
The laws in NJ changed drastically in the fall of 2003. If you are doing this in NJ make sure you are able to do what you want. I am in the process of doing a deal like that right now.
The investor bought the house with a loan I gave him for that purpose and to fix up the house. When the house is sold we will split upthe profit.
I know the person very well, so I trust him. Just be careful and have all the plans laid out before you invest your money.
Good Luck
Lori
[addsig]
Lots of call for this but there are, of course, some difficulties.
In essence you are willing to let your normal income (the charge for the rehab) ride in the hopes that the investor is smarter than you are-- i.e. that he will make more than twice as much money than you would have charged him to do the work.
Now, if the investor really is smarter than you are he won't need your help in this way. So you are really betting on a guy who is about as smart as you are.
Second. If you bought the house yourself then you could use this as a "make work" project-- i.e. a place to park men when you don't have paying work to put them on. This is a very smart move for a contractor.
But if you are working for an investor he is going to want to be your first priority-- just like every other customer you have. So the house becomes just one more scheduling nighmare in a business that already has way tooo many scheduling nightmares.
Get rid of the investor--buy the house yourself.
Mark
Thanks very much for the replies. Certainly food for thought. Better it seems to have a full partner that you know and trust or go it alone and cut out the middle man. That's what I like about this site, sensible advice.
Thanks again.