He offered 25 percent for my scope of work, which is the deal
Guy I've done two walkthroughs for wants to make it a standing JV. His pitch is that his buyers keep coming back with rehab numbers 20k over his and killing deals, and that a written scope from someone who actually builds fixes that. He's offering 25 percent of the fee.
Deal on the table right now. 1962 ranch, 1,340 square feet, slab, contract at 96k. He's telling buyers 205k ARV and a 62k rehab. I walked it Saturday.
My number is 78k, not 62k. The difference is the panel is a 100 amp with a subpanel someone added without a permit and the whole thing wants replacing, there's a hairline crack across the slab in the back bedroom that I want an engineer on before anyone touches it, and the roof has two layers with the second one laid over curling shingles. He priced a reroof at 9k. Tear off of two layers on that footprint runs closer to 14 here.
At 62k rehab a buyer at 118k is doing 180 all in against a 205 ARV. At 78k that buyer is at 196 against 205 and the deal is dead, unless the contract comes down or the ARV is higher than he thinks. I pulled three closed comps in the subdivision and I get 198 to 208 depending on whether the garage is converted, which on this one it is, badly.
So he has a 22k fee in his head and my scope probably takes it to 8k or kills it.
What's actually in front of me is not this deal. It's whether I sign a standing 25 percent JV where my job is to produce numbers that shrink the fee I'm being paid a share of. I don't know how you structure that so nobody ends up resenting the other person. Flat fee per walkthrough plus a smaller success piece is the only thing I've come up with and I don't love it either.