We have 3 couples that have some experience in doing some house renovations. We are all at a stage where we would like our money to work for us not against us. We want to capitalize on investing by only for a 10 year period. So of course we all though about buying something, fixing it up and flipping it. As you can see having 3 couples maxes it complex. How would we structure this? Would we create a company and incorporate then buy the property through the company. To make it more interesting we plan on using a lot of sweat equity to fix the house up. How do we figure out who gets what from the profits especially if one couple contributes more than the others? (maybe a reality TV program in here somewhere). Do we each go though different financial institutions to come up with the mortgage? How do we capitalize on putting the minimum down to free up the cash for repairs?

btw... you have tons of great information here!

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Apr 19, 2012
RE: Structure
by: Anonymous

Hi, thanks for the questions!

This is definitely a reality TV show in the making, we agree!

From our experience you would set up a corporation and lay out a shareholder agreement outlining the details of everyone’s roles, money expectations etc. The bank will still likely make you personally guarantee to financing because the corporation is new and doesn’t have any Profit or Assets.

We know of people who have also done this without a corporation. They use a “Joint Venture” agreement put together by a lawyer. This agreement outlines things like how much work everyone is responsible for and what happens if someone doesn’t hold up their end of the bargain. This may be the easier approach, however, you’ll definitely want a good lawyer to craft the agreement for you.

From our experience you’ll want to work with a good mortgage broker instead of the bank because they’ll likely have more financing options for you. Look for one who does a lot of mortgage volume … they typically have strong relationships with several lenders, chartered banks, private money and others.

Hope that helps a tad! Let us know when you’ll be on HGTV! :)

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