Home Improvement Contractor - Licensed Contractors
What percentage should a developer receive for a new building if he doesn't act as the general contractor?
I am a physician who is going to build a new medical office. I have someone who is a developer helping coordinate the permit process, overseeing the engineering and architecture and possibly bring a partner to the deal. He hasn't put out any money and won't act as the general contractor but thinks he deserves 1/3 of the project. He will assume part of the mortage risk but won't have an office in the building and therefore won't be paying rent. I think he wants way too much but I have never worked with a developer before. Help!
Public Comments
- Why are you paying him anything? That's a great question. What value is this person adding? Why isn't the general contractor coordinating the permit process, overseeing the engineering and the architectural. (To be honest with you, if you get this other person involved and they actually do all of this it would make it harder for the general contractor to complete the project.) You are already paying a general contractor to construct this building for you. There is absolutely no reason for anyone else to be involved. I sure wouldn't pay him 1/3 of the project. It just doesn't make any sense. Also, how is he assuming any risk on the mortgage? That doesn't make any sense either. I'm sure you are personally guaranteeing everything because I understand the business. I hope you're not offended by what I'm about to say. People see you as a rich doctor and therefore it's okay to overcharge you for everything. Speak with the general contractor and find out what he thinks about working with this developer. Something else you should think about. Your a doctor and I'm sure you work long hours. You don't know anything about owning real estate. Why would you want to own your own medical building? Usually it makes more sense to rent. (I owned and operated a community mental health center for five years.) Good luck.
