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<p>I will look into it eventually. Right now the % of our assets involved in the real estate sector is way too high. </p>
<p>If there are no hiccups and the transaction complete as scheduled. we would have an annual appreciation of about 4.7% on the initial purchase price. The house generates income of slightly more than 4% annually. In addition, the initial investment was leveraged, I think we put about 30% down initially. </p>
<p>I never had the stock market give me that kind of return over the years. I am more apt to lose my shirt.</p>
<p>It was about 10 minutes after the snow stopped coming down in the “2013 Blizzard” that the calls started.</p>
<p>“The driveway isn’t plowed yet, when is he coming?”, “The plow guy did a lousy job”, and numerous variations of these themes.</p>
<p>I went around on Sunday for about 3 hours shoveling sidewalks and cleaning up after the plow guy. I have one building where the city plows and people shoveling out their cars left snow piled on the sidewalk in excess of 6’ high. I didn’t shovel that out. :D</p>
<p>Hopefully I don’t get fined by the city.</p>
<p>The glamorous side of landlording… 
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<p>^ It is always hard work, that’s for sure. Sometimes people would look at us and say " You own real estate… how nice (local real estate had been doing very well) " . Most do not realize the amount of work that is involved.</p>
<p>We owned a rental property about 30 years ago. It was a huge headache. We always had trouble finding good tenants. Then there was all that time we spent maintaining the property. It just wasn’t worth it.</p>
<p>It is really a big boy business。You really can get professional admin and service with over 100 rental units in each location, especially if the units are in the class A category. For little guys with 10 or less units spread over different geographical areas, the headache they created is not worth the efforts.</p>
<p>My contractor and I are considering going into business together, but it may just be a pipe dream. We’re thinking of buying a cheap house to fix up and flip. I’d provide the cash and the taste, and he’d do the work. </p>
<p>How would this be structured so we both come out ahead? I could buy the house outright by myself and just hire him to do the work, but I want to share the risk going into it and, in exchange, also share the profit.</p>
<p>VH
You must know construction well， otherwise，how do you know how much “work” he put into it? And how do you split the “profit”? 50/50? lets say you buy one for 100K and it needs “20K” of work and it sells for $160k. Who is at the most risk? and if he screwed up the job who is responsible？ How do you know he put in 20K？ 30K or 50K？ He can give you all sorts of excuses that he had put in X and expect Y, once the wall opens up, you are at his mercy.</p>
<p>alp, I understand your concern. I do trust this fellow, but I would also be at the site every day. That would make it difficult for him to bamboozle me. </p>
<p>I’m looking for more business advice, however. If I put up the cash – in other words, I am taking the financial risk – and he does the work “for free,” how do we share in the profits (or losses)?</p>
<p>DH and I bought one condo unit in a small building about 25 yrs ago.
It is literally 2 blocks from our house. We were very young and naive and really had no
business doing this. I still marvel how we came out ahead, the RE market was so different (better) then than now.</p>
<p>Still, we had the vacant apt for a few months, the deadbeat half of two renter friends, etc.
Bought it for 77K and sold it two years later for 117K. Invested most of the proceeds for baby son’s college. That WAS a smart move…</p>
<p>I would not buy rental property again.</p>
<p>vh</p>
<p>here is one way to share the profit
LETS say if you bought a house to flip, you paid 100k and needs 20K of work.
If you pay all 120K you have it done and all the profit is yours. That 20K already factored in the profit for the contractors.
So, if the contractor put up that “20K”, you did not put up any thing. His share of profit on selling the property at the most is 20%. In other words, he made money by grossing up his cost to 20K AND he has the upside on the back end.</p>
<p>If I were you, I won’t share profit with him but will give him a “bonus” if he did a good job.</p>
<p>OTOH, if you bought a house for $50K and it needs a 100K worth of rehab, that is another story, because that will involve redesign and other stuff.</p>
<p>Actually, wouldn’t his share of the profit be $20,000/$120,000, or 16.7%?</p>
<p>But I understand your logic. I’d be putting up cash, and he’d be putting up sweat equity.</p>
<p>What about cost of material? Some times it is substantial, if you get into custom built cabinets and built in appliances.</p>
<p>The one I am doing, we use the least expensive stuff, even that came out a good penny.</p>
<p>I’d factor that in, as well as any taxes and utilities that needed to be paid until it was sold.</p>
<p>If the material is on you， you should get some competitive bids. It does not make any sense to have some contractor his way and reap profit on the back end. Price for contractor work varies a lot, unless you get different quotes, you won’t know if you are getting the best deal.</p>