Traded 340 hours of labor for 20 percent of a house. Collected nothing.
A guy I had done subcontract work for bought a 1958 ranch, three bed one and a half bath, in a decent working class pocket. Purchase 168k, his money, his loan. I did the rehab: full bath, kitchen cabinets and counters, all the trim and doors, and I fronted $11,400 of materials on my own account because I get better pricing than he does. In exchange I got 20 percent of the LLC that holds the house. No cash for the labor.
We never argued and he never cheated me. The deal just didn't work the way I pictured it. House came in around 214k finished, rent 1,725. After the loan, taxes, insurance, and management at 9 percent, the house clears somewhere between 90 and 200 dollars a month depending on the month. He put the first two years of that toward the roof, which was 19 years old at purchase and needed doing, and toward paying himself back for the appraisal gap. Both reasonable. Both meant no distributions.
So my 340 hours plus 11,400 in materials produced 20 percent of a house I cannot sell, cannot borrow against on my own, and cannot force a sale of. The operating agreement gives the manager sole discretion over distributions, which I read and understood and agreed to. My hours priced at what I would have billed a customer, even at cost, was around $24,000 of value handed over.
Also, and I did not know this going in, getting an equity interest for services can be a taxable event in the year you get it depending on how the interest is structured, which is a question for a CPA and not for me. Mine was messy.
Differently: bill the rehab in cash at a friend rate, then put that cash into the deal as money alongside his money. Same economics, completely different position.