The GC wants to hold schedule risk himself and I can't price his crew
A flipper I've worked with twice wants to bring his GC into the deal directly on the next three houses. Structure he's proposing is that I fund purchase and rehab, the GC takes a fixed price per house rather than cost plus, and the GC takes a piece of the profit instead of part of his fee.
Houses are $145k to $180k purchase, rehab $70k to $95k each, exits projected $285k to $320k. My money in would be around $700k across the three, staggered.
On paper I like it. Fixed price means overruns land on the GC, and the profit participation means he cares about the exit rather than just billing hours. What I can't price is the GC himself.
He's got a five man core crew plus subs. He's been in business nine years. His last four houses for this flipper finished within two weeks of schedule, which is the only performance data I have. What I don't know is what happens when he's carrying three of my houses simultaneously plus whatever else he's got, and I have no visibility into his other book.
The fixed price only protects me if he can survive absorbing an overrun. If a house runs $30k over and he can't fund it, the fixed price is worth nothing and I own a half finished house.
So the question in front of me is whether I ask for his financials, and whether a GC at that size even has financials worth reading. Asking feels like it changes the relationship. Not asking feels like I'm underwriting the wrong thing.