Flip Partnership Sug?
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Flip Partnership Sug? (by Yenecka [OR]) Jan 16, 2019 9:18 AM
       Flip Partnership Sug? (by 6x6 [TN]) Jan 16, 2019 9:49 AM
       Flip Partnership Sug? (by myob [GA]) Jan 16, 2019 9:58 AM
       Flip Partnership Sug? (by Nicole [PA]) Jan 16, 2019 10:07 AM
       Flip Partnership Sug? (by Robin [WI]) Jan 16, 2019 10:20 AM
       Flip Partnership Sug? (by myob [GA]) Jan 16, 2019 10:24 AM
       Flip Partnership Sug? (by 6x6 [TN]) Jan 16, 2019 10:50 AM
       Flip Partnership Sug? (by Jeff [CO]) Jan 16, 2019 10:51 AM
       Flip Partnership Sug? (by Yenecka [OR]) Jan 16, 2019 10:54 AM
       Flip Partnership Sug? (by 6x6 [TN]) Jan 16, 2019 11:06 AM
       Flip Partnership Sug? (by CGB [MI]) Jan 16, 2019 11:11 AM
       Flip Partnership Sug? (by myob [GA]) Jan 16, 2019 11:41 AM
       Flip Partnership Sug? (by TenantWhisperer [MA]) Jan 16, 2019 11:53 AM
       Flip Partnership Sug? (by Robert J [CA]) Jan 16, 2019 11:54 AM
       Flip Partnership Sug? (by Sparta [OR]) Jan 16, 2019 12:08 PM
       Flip Partnership Sug? (by fred [CA]) Jan 16, 2019 12:18 PM
       Flip Partnership Sug? (by Steve [MA]) Jan 16, 2019 12:24 PM
       Flip Partnership Sug? (by Rangor [TN]) Jan 16, 2019 12:48 PM
       Flip Partnership Sug? (by Ken [NY]) Jan 16, 2019 12:55 PM
       Flip Partnership Sug? (by Landlord ofthe Flies [TX]) Jan 16, 2019 1:11 PM
       Flip Partnership Sug? (by Robin [WI]) Jan 16, 2019 7:27 PM
       Flip Partnership Sug? (by myob [GA]) Jan 17, 2019 6:03 AM
       Flip Partnership Sug? (by 6x6 [TN]) Jan 17, 2019 8:41 AM
       Flip Partnership Sug? (by Marv [IL]) Jan 18, 2019 5:34 AM
       Flip Partnership Sug? (by Marv [IL]) Jan 18, 2019 5:35 AM
       Flip Partnership Sug? (by Yenecka [OR]) Jan 18, 2019 7:59 AM
       Flip Partnership Sug? (by Robin [WI]) Jan 18, 2019 8:11 AM
       Flip Partnership Sug? (by BRAD 20,000 [IN]) Jan 18, 2019 8:04 PM
       Flip Partnership Sug? (by Yenecka [OR]) Jan 19, 2019 6:47 AM
       Flip Partnership Sug? (by Ray-N-Pa [PA]) Jan 19, 2019 1:48 PM
       Flip Partnership Sug? (by Yenecka [OR]) Jan 19, 2019 1:52 PM
       Flip Partnership Sug? (by Robin [WI]) Jan 19, 2019 2:34 PM
       Flip Partnership Sug? (by Ray-N-Pa [PA]) Jan 19, 2019 3:36 PM
       Flip Partnership Sug? (by cjo’h [CT]) Jan 19, 2019 7:17 PM
       Flip Partnership Sug? (by cjo’h [CT]) Jan 19, 2019 7:31 PM

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Flip Partnership Sug? (by Yenecka [OR]) Posted on: Jan 16, 2019 9:18 AM
Message:

Looking for advice: When two unrelated parties go in together on a flip project, what is the best way to go about formalizing the partnership? 1) Partnership, 2) LLC, 3) Other, 4) do nothing but write down on paper the expectations and everyone sign it. This is a limited partnership that may or may not perpetuate after the flip is complete and sold. Both parties are going in 50/50 on the financing. What have you done in the past and what has worked or not worked for you?

--71.237.xxx.xx




Flip Partnership Sug? (by 6x6 [TN]) Posted on: Jan 16, 2019 9:49 AM
Message:

I have not tried this yet but have thought about it. When I have looked up property information on county website before I have seen some LLC's Thank you for the post. Great question. --73.120.xx.xxx




Flip Partnership Sug? (by myob [GA]) Posted on: Jan 16, 2019 9:58 AM
Message:

Want to learn to hate your best friend-- or family member-- go into partnership--- that'll just about do it.

We have never taken any partner in 35 years. --99.103.xxx.xxx




Flip Partnership Sug? (by Nicole [PA]) Posted on: Jan 16, 2019 10:07 AM
Message:

PAID for, specific to your circumstance, legal advise is the only way for your real answer. You may get a lot of "suggestions" here but you need a very detailed financial and legal answer. --72.70.xxx.xxx




Flip Partnership Sug? (by Robin [WI]) Posted on: Jan 16, 2019 10:20 AM
Message:

You are about to get a very expensive education.

Assume the worst. Then write a contract for it. --204.210.xxx.xxx




Flip Partnership Sug? (by myob [GA]) Posted on: Jan 16, 2019 10:24 AM
Message:

Nicole "legal advise" -- hope you can take this OK?

YEA bring in an attorney -- really muddy the waters with that?

In my opinion- bringing in a partner is to bring in someone to blame when it goes belly up.

That's 35 years of experience and watching others ruin friendship and family dynamics by bringing others into the game. --99.103.xxx.xxx




Flip Partnership Sug? (by 6x6 [TN]) Posted on: Jan 16, 2019 10:50 AM
Message:

myob,good point! Thank you for sharing your experience. --73.120.xx.xxx




Flip Partnership Sug? (by Jeff [CO]) Posted on: Jan 16, 2019 10:51 AM
Message:

Myob is correct! --76.120.xx.xx




Flip Partnership Sug? (by Yenecka [OR]) Posted on: Jan 16, 2019 10:54 AM
Message:

Thank you. This is more of an acquaintance. I do plan to go to an attorney to have an agreement written up. I just wanted to do a little research on my own so I thought I would see what others have done. So far I have thought about a partnership and a joint venture. I do agree, there needs to be something in writing. --71.237.xxx.xx




Flip Partnership Sug? (by 6x6 [TN]) Posted on: Jan 16, 2019 11:06 AM
Message:

Come to think of it a friend of mine did this with someone he knew that was a realtor and they flipped the house,made some money but did not really agree during the process and my friend said he would not work with them again. I got this information through a mutual friend. --73.120.xx.xxx




Flip Partnership Sug? (by CGB [MI]) Posted on: Jan 16, 2019 11:11 AM
Message:

I would not do this without serious thought. You need to think of the worst situation and plan accordingly. A contract, with the right stipulations, will protect you legally when things go bad. It can't, as others have already alluded, protect a personal relationship. I follow Judge Judy's advice: never go into business or loan someone money if you are not willing to let go of the relationship. --68.49.xxx.xxx




Flip Partnership Sug? (by myob [GA]) Posted on: Jan 16, 2019 11:41 AM
Message:

CGB i feel like judge judy now!!!! Thanks. --99.103.xxx.xxx




Flip Partnership Sug? (by TenantWhisperer [MA]) Posted on: Jan 16, 2019 11:53 AM
Message:

I do flips and totally agree with myob(GA).

A flip partnership is a great way to lose a friend or make dinner next Thanksgiving really awkward.

The only scenario that could possibly work is if one of the participants is brought in as a SILENT partner. You both will need to come to a common definition of what SILENT means.

Flips are time consuming enough without having to consult/agree on a paint color and hundreds of other decisions that need to made on-site and quickly. --73.16.xxx.x




Flip Partnership Sug? (by Robert J [CA]) Posted on: Jan 16, 2019 11:54 AM
Message:

On my last flip type partnership with 7 partners, we had a general written contract between ourselves where as "one person" could make the final decisions. That person was me! Licensed contractor and investor for 40 years now.

But we hit a snag. Some of the partners wanted to spend money only on things that showed and on the behind the walls stuff, they wanted to skimp. I tried to explain that for a "few more bucks" we could provide quality work that was with a permit and inspected by the City.

On the sale we had to discount the price because of the short-cuts taken. We could have created a bidding war and gotten above the listing price. --47.156.xx.xx




Flip Partnership Sug? (by Sparta [OR]) Posted on: Jan 16, 2019 12:08 PM
Message:

To clarify- this is not a close friend or relative. We are both realtors who have done multiple flips. We have also partnered in our RE business previously and now.

I do agree, going into business with a friend will create hardship and possibly you will lose the friend. --71.237.xxx.xx




Flip Partnership Sug? (by fred [CA]) Posted on: Jan 16, 2019 12:18 PM
Message:

You need a partnership agreement, even (especially) with family and friends. Period. --99.59.x.xxx




Flip Partnership Sug? (by Steve [MA]) Posted on: Jan 16, 2019 12:24 PM
Message:

As others have said unless one of the partners is only a source of funds / credit these thing rarely work out the way anyone intended.

If you do decide to go forward make sure you agree on how the partnership can be dissolved or terminated. This is especially true if something should happen to one of you & heirs take over. --96.237.xx.xx




Flip Partnership Sug? (by Rangor [TN]) Posted on: Jan 16, 2019 12:48 PM
Message:

I actually had two good experiences with a joint venture after hearing Jim Ingersol speak at the convention a few years ago, but it may be because it was set up the way Steve mentioned: my friend/co-worker was the money half of the equation and I was the logistics half. He purchased the properties and paid for everything involved in getting them to market. I arranged all of the work mainly because of knowing who could be trusted to do the work (which my friend had witnessed over the last number of years).

He didn't want another job but had money to invest and I already had a decent system and team for making all the improvements. At the end we split the profits and both walked away pretty happy. I would do it again but ONLY because this is a person I trust. Also the risks were not huge for either of us. If he sold it and completely cut me out of the deal all I would lose is my time. His risk was minimal as well - he owned the properties. To be honest we didn't even have a handshake to seal the deal, let alone a piece of paper. I get that many would say that that is completely foolish.

All that being said, I would go with the advice of the majority on this board. My experience I think is unique, whether because of the way it was set up or the individuals involved, I don't know. Just giving the other side of things. --166.170.x.xx




Flip Partnership Sug? (by Ken [NY]) Posted on: Jan 16, 2019 12:55 PM
Message:

I have done quite a few partnerships over the years.There must be a reason you need each other like I have the cash and the other guy has the deal which is a real good deal,there must be an understanding ahead of time of what is the goal meaning flip it right away and do no work,do all the work and flip or keep and rent etc and there needs to be an understanding of who does what like I provide the money and the other guy handles the rehab and eventual sale etc.The only time I ever had a problem was when I did a deal with a contractor who simply didn't understand that he doesn't get paid till the house sells,they are so used to getting paid when the job is complete that I wont do a deal with a contractor again and quite frankly they cant bring something to the table that I don't have or cant hire done anyway --72.231.xxx.xxx




Flip Partnership Sug? (by Landlord ofthe Flies [TX]) Posted on: Jan 16, 2019 1:11 PM
Message:

Keep everything separate. If their duties are to find the houses, then hire him as wholesaler. If he/she is going to loan the money, take out a loan with them. If they're selling it once finished, hire them if they're licensed.

But I would never partner. Someone does more of the work, someone pays more money, someone takes on more risk. Ill feelings will result. Or you'll go to war on wallpaper colors. --108.69.xxx.xxx




Flip Partnership Sug? (by Robin [WI]) Posted on: Jan 16, 2019 7:27 PM
Message:

Ok, here's my true story:

DH decided to partner with a guy on a flip. He would bring the money and the other guy (let's call him CJ) would handle the rehab. CJ had all the right stuff. He'd done 30 RE deals already, his wife was a real estate agent so he could save on commission, and he had a guy, Mr. GC, who'd done a couple of rehabs for him before. Mr. GC had a day job but could take long lunches to oversee his stable of contractors. CJ had bought the house cheap, it was in a good neighborhood, and with Mr. GC's rehab estimate he figured he could make 90K on the flip easily. What could possibly go wrong?

It started when they opened up the walls and found aluminum wiring. Mr. GC knew a lot, but not enough to check the breaker box before he wrote the estimate. And CJ had gotten an estimate from him, not a quote. It rained nonstop for three weeks, which delayed pouring concrete for the new garage which meant no garage to store supplies in which meant a lot of time shuffling materials around. When the garage was built, they realized that it would have a non-matching roof and the entire roof needed to be redone. When the water was turned on, they found leaks everywhere and ended up replacing all the plumbing. Material costs were higher than anticipated. Mr. GC was paying his guys by the hour, and as they started to take advantage of him the work went slower and slower. Mr. GC finally fired a couple of guys and started working nights and weekends to get the work done himself. The project went so far over budget that DH finally cut off funds. CJ started working nights and weekends on it too.

When the house was finally done, it was 40K over the original rehab budget of 60K and had taken 8 months to finish instead of the estimated 3. The profits were much, much smaller than anticipated. Fortunately, they had a CONTRACT that stated that DH would either get a share of the profits OR X% interest on his money, whichever was greater. So we were protected. After DH was paid for the use of his money, CJ didn't get nearly what he'd anticipated.

Then the drama started. He came whining back to DH about how he'd sacrificed so much family time to get the project done, and he thought this was supposed to be a partnership deal so they should split the profits evenly, and he'd acted in good faith the whole time, and it was all due to factors beyond his control, blah blah blah.

I stand by my earlier comment. Write a contract for the worst-case scenario, and consider yourself very, very lucky if you don't need it. --204.210.xxx.xxx




Flip Partnership Sug? (by myob [GA]) Posted on: Jan 17, 2019 6:03 AM
Message:

Robin your post was like an old episode of this old house. Estimate is 150K and they spend 370K.

Only takes one AH! S*** to wipe out 1000 attaboys! --99.103.xxx.xxx




Flip Partnership Sug? (by 6x6 [TN]) Posted on: Jan 17, 2019 8:41 AM
Message:

Thank you for sharing your experience Robin. It sounds to me like GC did not really know what he was doing at least in terms of estimates anyway. --73.120.xx.xxx




Flip Partnership Sug? (by Marv [IL]) Posted on: Jan 18, 2019 5:34 AM
Message:

As stated, any partnership needs a partnership agreement. You need to know how the partnership will be ended and what happens when one party wants to exit early. --173.15.xx.xxx




Flip Partnership Sug? (by Marv [IL]) Posted on: Jan 18, 2019 5:35 AM
Message:

AGREEMENT NEEDS TO BE DONE IN ADVANCE. No "lets buy this thing and make an agreement later". It never gets done. --173.15.xx.xxx




Flip Partnership Sug? (by Yenecka [OR]) Posted on: Jan 18, 2019 7:59 AM
Message:

Thank you all for your input. I will call my attorney today to have something drafted up. It has been cemented in my head --71.237.xxx.xx




Flip Partnership Sug? (by Robin [WI]) Posted on: Jan 18, 2019 8:11 AM
Message:

I'm glad to hear you've seen the light. Come back and report after the deal is done and let us know how it worked! --204.210.xxx.xxx




Flip Partnership Sug? (by BRAD 20,000 [IN]) Posted on: Jan 18, 2019 8:04 PM
Message:

Yenecka,

Robin's tale is "normal". Happens all the time.I admire her clause about minimum share from the partnership.

Unless you AND the proposed partner are experienced business people with a strong background of making decisions and getting things done DO NOT enter into ANY kind of partnership.

For some reason people have this romantic idea of how a partner will fulfill their dream. It's the exact opposite - you have to manage a new relationship on top of the business problems that will pop up. And you are really in partnership with the guy AND his wife. No spouse sits silent.

Deals and flips are easy enough for one person to handle. 2 makes someone redundant.

WHY do you feel the need for a partner?

Know that legally, if the partner's kid has a bad vehicle accident and kills someone YOU and your personal assets can be drawn into the law suit. Attys LOVE to sue people who own real estate!

My Grandmother taught me "Only be the 51% or more partner." 50/50 means when you disagree you are deadlocked. It WILL happen.

Why do people ASSUME they should share the profits 50/50? If one person provides all the knowledge, finds the deal, provides the money, handles the sale, carries all the risk, they should share equally with the guy who paints and trims the bushes (no risk).

How do you know this acquaintance is for real? Have you run a background check, credit report, tax returns proving the ability to make money?? Lotsa people look good and tell a great story. Few get the job done profitably.

My suggestion: if you are the one needing money, borrow it from this person, pay him/her interest and do the deal yourself. If you need a worker, hire it and stay in control.

BRAD

--73.102.xxx.xxx




Flip Partnership Sug? (by Yenecka [OR]) Posted on: Jan 19, 2019 6:47 AM
Message:

BRAD, I have admired many of your posts. Thank you for all your insight! Yes, it is the 4 of us- the women are the one ones in RE, husbands have no jobs and are the heavy. We have 2 very strong minded women running the show who have worked together on other RE stuff. Her husband is a contractor by trade and on purpose does not have a job so that he can do this stuff. My husband is retired. So far we have gone into this equally and we have a draft LLC agreement now. We both have umbrella policies in place. Just need to finalize. We all have done this before and agreed this will be a good one for the 4 of us. It is less risk financially for us, that is our reason. I totally agree that there is risk there, gotta take some risks to make some money. I will check back in with you all and let you know how it goes! --71.237.xxx.xx




Flip Partnership Sug? (by Ray-N-Pa [PA]) Posted on: Jan 19, 2019 1:48 PM
Message:

While the partners still like one another and can agree on it, please create a disillusion agreement that outlines what will happen when the partnership is terminated. --72.23.xxx.xx




Flip Partnership Sug? (by Yenecka [OR]) Posted on: Jan 19, 2019 1:52 PM
Message:

Agreed- that is in our draft --107.77.xx.xx




Flip Partnership Sug? (by Robin [WI]) Posted on: Jan 19, 2019 2:34 PM
Message:

It should be a "dissolution" agreement, but "disillusion" is just as apropos! --204.210.xxx.xxx




Flip Partnership Sug? (by Ray-N-Pa [PA]) Posted on: Jan 19, 2019 3:36 PM
Message:

Auto correct got the better of me.......Thanks Robin --72.23.xxx.xx




Flip Partnership Sug? (by cjo’h [CT]) Posted on: Jan 19, 2019 7:17 PM
Message:

Yenacka,a lot depends on your outlook on life in general. I’ve gone into parternship with other Irish friends some Police personel some not.we went in on a handshake and came out the same way! No attorneys involved. Nothing in writing! Sometimes lawers bring more stress into the equation than necessary!the people involved with me ,are more closer than we have ever been, when you become involved with people in a parternshipe you become more aware of their personal problems and they yours.Like I said originally!Depends on your general outlook....... Charlie................................... --32.214.xxx.xx




Flip Partnership Sug? (by cjo’h [CT]) Posted on: Jan 19, 2019 7:31 PM
Message:

CGB,not a fan of Judge Judy.Too egotistical Thinks she knows more than she does.............Charlie,,,,,,,,,,,,,,,,,,,,, --32.214.xxx.xx



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