What Would YOU Do with this Proposal? - Posted by David (CA)

Posted by Cork Horner/San Diego on March 09, 2001 at 14:14:40:

My experience? without a ’ boiler plate’ written agreement, all " partnerships" are laden with pitfalls and problems lurking. In my experiences, written agreements are only the beginning. If you want to hear boring details, you can email me privately.

What Would YOU Do with this Proposal? - Posted by David (CA)

Posted by David (CA) on March 09, 2001 at 11:25:28:

Hello everyone,

Need your wisdom and experienced opinions.

Had lunch with a general contractor friend yesterday. He asked me if I would like to do join forces with him to rehab properties. We have known each other for 13 years. WE consider each other good friends. We trust each other with our lives and our families. He does not have the time or the system in place to find fixers. He is very aware of what I am trying to do in real estate.

This is what he proposed. I will do whatever it takes to find the fixers, once they pass the due diligence he then begins the rehab. All labor and materials are at his cost and will be charged to the rehab at cost not retail! He will pay for these costs out of his own pocket! These rehabs will also help to keep his crews busy and employed in between his own biz and our rehabs.

Before rehab is complete I will begin the sales process to get it sold asap. When rehab is complete it will be my responsibility to get it sold. The plan is then he will be working on the next rehab. We will split the profits 50/50 on the back end. He has two crews working for him currently.

As for the other issues of structuring the biz, and other operating expenses and up front costs IE: deposits on offers, costs of hard money loans, advertising, monthly payments etc, we are currently working those out.

What are your views on this? Trust is not an issue for me. Does this make good business sense? What are the pro’s and con’s I should be aware of? Your insight and opinions would be greatly appreciated.

Thanks for your time,

Re: What Would YOU Do with this Proposal? - Posted by Rob

Posted by Rob on March 10, 2001 at 11:09:49:

I am probably the easiest to get along with. Things always seems good in the beginning, but somehow they get abused. I have a couple of 50% deals with partners and they were good in the beginning, but when the deals goes bad, or the stocks market hurt them. They bring their problems to my interest of the deals.

They will say it is not my purpose to cause this: like let the tenant fall behind by 4 months, when I told him to evict immediately. He manages this with no money down on his part. This is a looonnnng distance deal. The problem is that he took all the money and invested and didn’t make plans to put some of the money aside to pay back.

The other have accounting problems, because she losing money in the stocks market and busy with her job, so she doesn’t have time to do the accounting. I have been asking her to set up a bank account on the property only for 1 year, and recently ask her for my rental money for the last 8 months. These two with probably lead to legal action in the coming months.
So much for friendship and being a nice guy.

Oh, by the way. Both of these deals make money, or positive cash flow.

Make sure you have it in writing what you are going to do, and have a full understand about investing (the profits and losses that goes with the territory). Watch out and protect yourself. Good Luck!

Sorry for this long posting.

Re: What Would YOU Do with this Proposal? - Posted by SueC

Posted by SueC on March 09, 2001 at 14:39:17:

Have a nice long talk with him and ask, What would happen to our friendship if our business relationship had problems? They say never to go in biz with family, and this sounds like he’s pretty close to that.

Uh, do guys talk about that kind of stuff? :wink: