Combining Family Home Improvement Business with Real Estate ...

Originally posted by Matthew Scott

Thanks for the reply! Well I guess I was just coming at it from a place where I am only 25 and don't have a lot of money saved up. I have a decent paying (in education so as decent as that can be) so I've been putting money aside, but I figured I could try to use them as almost an investor and have their investment be in materials. Eventually I could break off on my own and just use them as contractors to give them business while also getting better prices hopefully.

I hired my dad (also a contractor) and it did not end well for me. To avoid any conflict or hard feelings I didn't realize voice much concern and just paid to complete a renovation with him. I make more money now by not accepting favors from family. Hopefully you wont share my experience

On the getting better prices thought. My experience is you likely wont. Contractors are used to getting materials list at retail and invoicing customers. The most you can hope for is typically the 10 or 15% discount using the pro-desk quote system at lowes/homedepot. Or sometimes local suppliers give "wholesale" pricing and deal specifically with contractors; but, my experience is these wholesale prices are almost the same as retail.

Generally an investor who is rehabbing is scouring the clearance isle, checking out craigslist, and visiting the scratch and dent appliance store in town. Contractors aren't incentiviaed to do these things. You'll get better pricing through these avenues than the contractor discount. And, btw you can get most contractor discounts yourself at lowes/hd if you just put in a quote and tell them you're an investor. They'll give you access to the quote system.

I sound like a bit of a gloomy gus, but don't let me discourage the overall goal. There is always a way to structure things so that it is win/win. If you try the profit sharing and it doesn't work as you expect, you can try the simple promissory note. It's a great positive that you have a good family to work with and you'll find both ups and downs as you travel the road.

I'd ask your dad what his problem is... and try to structure the deal so it helps him. As an example, if he is concerned about the weeks he doesn't have work (and concerned for his workers well-being during those times) you may want to structure the arrangement so he comes in at a slightly discounted rate for those weeks only.

Source: http://www.biggerpockets.com/forums/61/topics/81176-combining-family-home-improvement-business-with-real-estate-investing

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