Don Costa, is a married father of 3 incredible kids. He has been in the real estate business for over 10 years. He started Knocking on doors and wholesaling properties, and then quickly moved to flipping houses. He took some time off during the crash and jumped back in 2012. Currently our office is on track to do a 100 flips this year. He loves what he does and he loves helping others get into the business.
Don started flipping houses when he was unemployed. The unemployment check only covered his living expenses and so he had to find a way to find deals, get funding for them and to fix them so that he could sell them and profit.
He got a notice of default list and began going door to door to try to buy houses from the people about to face foreclosure.
To buy and fix up the houses, he worked out a deal with a money partner to joint venture. The money partner would put up the funds. He would find the deals and manage the fix up and they would split the profits 50/50.
Not all deals are 50/50, we discuss some of the other terms investors use and how those are determined. Basically, the more value you bring to the table for the joint venture, the more you should make out of the deal. If you are finding incredible deals, managing the rehabs and getting them sold, shouldn’t you be asking for a 60/40 split. Heck yes.
Don didn’t have money to make monthly payments to hard money and private money lenders. He didn’t have money to spend on rehabs before getting draws from lenders. He had to joint venture.
He still joint ventures to this day. The reason is that he always wants to do as many deals as he can. Joint venturing allows him to be able to do that.
Finding joint venture partners can be had by networking. You hear it all the time, but do you do it? That’s the real question.
Don recommends using a written agreement to make sure everybody is on the same page and understands the deal. You can click here to download the agreement he uses. (Please be sure to have an attorney review this before using it - the agreement is only provided for educational purposes)
He talks about some of the situations he’s encountered with different JVs. One wanted to know if paint from one job was going to another job if it wasn’t all used. You probably don’t want to have someone partnering with you that is concerned with such minute details.
Another thing to be careful of is partnering with someone that wants to give too much input on rehabs. You do not want to have too many chiefs trying to run things. Contractors won’t know who to listen to or to check in with about change orders, etc. You should control as much as you can.