yes write a contract...

and get a lawyer on your side (if you don't have one yet).

i used to intern for an architect who teamed up with a developer and business man - people he went to church with, they all seemed like friends. they formed this "partnership".

my boss invested his own time, people and resources with the hopes of expanding his business, with the hopes of getting paid bigtime once this kicked off.

our office produced renderings, marketing materials, site plans, designs, etc. in numerous states. my boss got licensed in multiple states during the process.

after a while there was still no money coming in, we could feel the stress in my bosses presense. i started hearing rumors of in-fighting amongst the partners. next thing i know, there's lawsuits and lawyers involved. it was pretty nasty.

they all hated each for a while. even their kid's were bad-mouthing each other.

every situation is different. there are no rewards without any risks, just take the necessary precautions.

If they dont have the money to compensate you now, what makes you believe they'll have it later? Contracts are worthless unless you have the money to enforce them later. Say yopu dont get paid, how will you afford the tens of thousnads of dollars to fo after this developer?

I don’t want to burst your bubble but a sound business decision should be void of any emotion and in this case it sounds like theres some frustration over the current job market and excitement about doing something new. Emotions cloud rational thought.

However, as my old partner said to me once about starting his first firm, " If I wasn’t so stupid I would have never started this place".

sometimes circumstances dictate that we take risks. at least this developer isn't asking you to invest money too (on top of you obvious time investment). i won't pretend to know the right answer here...but if the alternative is just doing nothing then maybe it's worth trying.

I'm with puddles. It's actually a good time to be taking risks, because no one knows what's going on. DO get something in writing so in case the developments start to make money you will get a share: you are being partners in the risk, so you should be partners in the outcome either way. This also seems like a situation that warrants both some flat fee payment AND some percentage of profits. A lawyer will help you work that out, so that even if you don't get rich off this, you do at least get paid something.

Also, get that rent-free loft compensation written into the contract, so it doesn't become an issue later.

I say that because my partner once drove a client's car for a few months as part of his compensation, and though it worked out well enough in the end, they had different expectations as to how much "borrowing a car" translated to in actual money.

This idea is 90% likely a terrible situation for you to get into. How are you going to feel when you've been working for free for 6 mos. and the developer drives up in a new car....or goes on a nice 2 week vacation to the Caribean? Should he give up these things to pay you? From your perspective, of course he should...from his, maybe not.

Here's what I recommend you propose to your potential client/boss:

1. Determine the value of the services you'll be providing.
2. If the developer cannot pay you, then he must give you an ownership share that's equal in value to the services you've rendered.
3. If the developer later has the cash to pay you, he can purchase your ownership share, plus interest.

As future work is started, you repeat this, increasing your ownership share. Definitely have a lawyer set this up.

If the developer doesn't want to do this, he's likely thinking that he'll use you for free for as long as he can, while pleading poverty, until you get fed up and quit.

I would not sign a contract that just said that the developer will pay you at a later date. If he doesn't, it will cost you significant $ for the lawyer needed to get that money.

Or if you want, move to NYC and work for me for free...I'll pay you in the future, I promise...and the work's probably more interesting than the property management stuff.

certainly write up a contract spelling out the terms of your arrangement...whatever that may be.

If you would be giving up paying work, ie. other projects, freelance opportunities, etc. to pursue this the answer is obviously NO.

If it is something you can balance while bringing in survival funds, than I say go for it. You have nothing to lose but time (and our time these days comes cheap) and potentially alot to gain in future work, contacts, portfolio, experience, etc.

This sounds like a simple partnership agreement. Sounds like he wants you to take a significant portion of the risk. Therefore, you need to work out an agreement that give you some say in how things play out. A partnership.
On the other hand, this could be commission based. I would make sure you get a hell of a commission not just to cover your time as a freelance architect but for the huge risk you are taking. Don't just hope that this could lead to other opportunities. Get yours now!

get a contract written by your attorney (more risk/exposure for lawyer fees there too) and go into this with your eyes WIDE OPEN ! I was once warned by an experienced architect that the definition of "developer" is someone who is very good at getting other people (architects, engineers, land-owners, inverstors, etc.) to accept risk for HIS reward - most times the only risk a developer has is his time while you are risking your time and liabilties for a much smaller fee. Good Luck

It doesn't matter if you become part owner or have a contract to be paid later: if the project goes under, you still don't get paid! Which is a very realistic outcome in this economy. And in terms of professional respect, would a developer even dream of approaching his lawyer or accountant with this kind of "do-the-work-for-free-and-I-might-pay-you-later" attitude?

All,

Thanks for the response. They have all been quite helpful. It seems as though a lawyer is definitely needed with a contract to follow. I like the suggestions regarding taking some sort of share in the property equal to the value of our services rendered, at least until other types of compensation become available - seems like a sort of insurance - and will mention this to my partner. Perhaps we try to negotiate a share in some property that is already producing income? That way it is not dependent on when this property produces income. Thoughts?

After a brief discussion on compensation it seems we are looking at an hourly rate pay structure at $40/hour...which is not bad considering the cost of living here. (obviously "not bad" is considering we get paid at all) This developer has worked with a different fledgling firm in the past (though under a better economic climate therefore more immediate compensation) and it ended up working out great for them and they have split apart on their own.

This developer is a bit less of a developer and more of a planner (city planner). I dont think he fits within the typical developer stereotype.

Thanks again for the responses and please keep them coming if you have anymore thoughts.

beta

I'm reconsidering my previous post thanks to Redo and Cajun.

the liability you will be accepting for a pay later may outwiegh the benefit.

I guess it depends on how comfortable you feel in the relative size and complexity of the project. Is it a 4 unit project or a 40 unit project?

A bird in the hand is worth 2 in the bush

i wonder if you could structure a deal the way alec guinness structured his compensation for playing obi wan in the first star wars flick. he was paid very little but, took points off the films profits and i think i read the film made some money. maybe a deal where you take a % of rental fees or whatever the developer is developing.

1. Contract, as people state
2. Compensation for your risk, not "equal to your pay", you make more money for more risk
3. $40/hr seems ridiculous low


Most importantly, make sure you get cash for risk. Money is not easily come by these days, so that is even more of a risk. If it were me, I'd ask for a percentage ownership in the project.

Something way above and beyond what your time is worth. That's the penalty he pays for not having cash now, and that's the reward you get for taking the risk.

You know you will have zippo if it all goes under, which, I would write in the contract then he owes you the hourly compensation (but you have to realize you will, most likely, never get that).


lb is right, this is a good time to take advantage of risk opportunities, but please keep in mind that risk = more reward/no reward. It is not fair to just think that you will 'get paid' at the end, there's no reward for your risk short of satisfying your immediate desperation.

Or as JK so eloquently points out, money now is worth twice as much later. I'd look at this as an opportunity for work and also a large profit. That's just business, your client will understand he's gotta pay more later on to get work now for nothing and no risk (think about it, he is not risking anything)

You could look at a deal where you get a contract to buy property he is developing at a rate below valuation. I had a deal like this a little while ago [when property was booming, so it might not be as appropriate now].

So, you agree to trade your time into a deposit, with a contract to buy a property at a percentage below valuation.

Lets say its an apartment, and the registered valuation is $200k. You trade your time worth $20,000 as a deposit against apartment, but you agree to buy the apartment at a 20% discount, so $160,000.

Effectively, you can sell the rights to buy the apartment at anytime prior to settlement and make money off the difference when title is recieved. He gets a presale which helps with his funding, and you've made your $20k plus a potential $20k profit, or you retain a property with higher equity which you can the borrow against.

Its risky, but it worked for Nonda Katsilidis

You're not a prostitute. Prostitutes make cash money.

It is an opportunity, but as soon as you can remove the "questionable" part of that equation, then you have a deal. A binding, legal contract might resolve that.