Partnering with a backer to flip a house - but no constr exp!

**CDO tranches** · 12-28-2009 02:56 PM

Is this crazy? Next week I'm supposed to meet with a guy who'd be willing to put up the money while I put in the sweat equity (as a partner) in buying and renovating a house for profit.

I'm all about diving into something and learning on the fly, but I have never worked in construction in my life. I have interned at real estate investment companies but that's it. I've always thought that lack of experience shouldn't keep someone away from an interesting business venture, but a friend of mine warned me that it would, in her opinion, be a disaster if I've never physically worked on a house before.

Thoughts?

**richkid** · 12-28-2009 03:44 PM

IT really depends on how much you are planning on doing.

'Renovating' has such a large scale. To some people it is slapping on a new coat of paint, while to others, it means adding a new bedroom, re-doing the kitchen etc.

I have known of people who have had no experience to have successfully renovated a home - and made a profit. But I would say be careful.

Where are you based and planning on completing this renovation?

**CDO tranches** · 12-28-2009 03:58 PM

Originally Posted by richkid

IT really depends on how much you are planning on doing.

'Renovating' has such a large scale. To some people it is slapping on a new coat of paint, while to others, it means adding a new bedroom, re-doing the kitchen etc.

I have known of people who have had no experience to have successfully renovated a home - and made a profit. But I would say be careful.

Where are you based and planning on completing this renovation?

We're in Charlotte.

I posted this same question on another messageboard and now I'm getting a couple answers from them. Consensus so far is that it's a bad idea.

**richkid** · 12-28-2009 04:04 PM

why don't you consider bringing someone else on board that does have some experience? I know it cuts back on profit, but give you some experience.

Also, what is the market like in Charlotte?

**CDO tranches** · 12-28-2009 04:11 PM

Originally Posted by richkid

why don't you consider bringing someone else on board that does have some experience? I know it cuts back on profit, but give you some experience.

Also, what is the market like in Charlotte?

Hey that's actually not such a bad idea. I'll bring it up to him next time we talk.

Like anywhere, some great bargains right now in Charlotte. Certain neighborhoods have high foreclosure rates. Long-term, though, I would say the future is bright, kind of like Atlanta, Dallas, etc.

**richkid** · 12-28-2009 04:54 PM

sounds good. Im from Australian, so I'm not familiar with the US property market, but a bargain anywhere is still a bargain. Just make sure you do your research.

**DerekS** · 12-28-2009 05:16 PM

How much of a disaster it can become really depends on how much work the house needs and how it all shakes out for you. Sometimes circumstance just screws you, other times you get some breaks. The more work you're doing yourself, or the tighter your grip on your subs affects how much "control" you have over circumstance- but it still does what it wants.

Do you have a specific house in mind, or are you just preliminarily hashing details out?

**CDO tranches** · 12-28-2009 06:11 PM

Originally Posted by DerekS

How much of a disaster it can become really depends on how much work the house needs and how it all shakes out for you. Sometimes circumstance just screws you, other times you get some breaks. The more work you're doing yourself, or the tighter your grip on your subs affects how much "control" you have over circumstance- but it still does what it wants.

Do you have a specific house in mind, or are you just preliminarily hashing details out?

preliminarily hashing details out. He may have a specific house in mind already, but I'll find out if he has any ideas when we talk next week.

**DerekS** · 12-28-2009 07:06 PM

I'd definitely take it on a case-by-case basis- depending on how much needs to be done.

Do you have any project management experience? A general idea of materials cost? Any experience whatsoever in the field (what did you do when you worked for the RE investment firm?)

**Gaulkin** · 12-29-2009 12:22 AM

Sweat equity means nothing when the other guy is putting down all the money, good luck.

**DerekS** · 12-29-2009 09:48 AM

It can mean something when the person putting in "sweat equity" has extensive rehabilitation experience, a network of subcontractors, and the ability to complete a project on-time and on-budget.

That doesn't seem to be the case in this situation- but it could still prove to be a good chance to learn on someone else's buck.