Who's being the jerk in this financial situation?

[astorian]

If Jerry got exactly what he was promised, he has no gripe with Sandra, even if she made a bigger profit than anyone else knew.

[glee]

Sandra made you 20% profit in 9 months?
In this economy?
And she did a lot of work herself?

Sandra is a genius and a treasure.

Jerry is a total moron, incapable of understanding:

• what hard work is
• how to earn money
• what an idiot he is

Have nothing to do with Jerry.

[Skald_the_Rhymer]

I don’t think I wrote nine me, and if I did I was being careless. It was more like she promised to repay in 18 months, actually did in 15.

[Skald_the_Rhymer]

Just reread the OP. It does say 12 months. Totally my error.

[Hari_Seldon]

@muldoonthief

1. Was anything written down?

2. Was the 20% guaranteed - if the flip had lost money, would she still have given you your investent + 20% profit?

3. Did she specifically say 20%, or did she say something like “about 20%, depending on how much I can sell it for?”

To me #2 is the most important one - were you expected to share the risk? If so, then I think you should share in the reward proportionally as well. If however, she said you’ll get 20% regardless of the outcome, then you have nothing to complain about.

If you were sharing the risk - then I think not letting you share in the reward is a bit shady. If that’s what you agreed to, then you can’t do much about it, but it would leave a bad taste in my mouth. Certainly if she did a significant portion of the work herself, she deserves more, but ISTM the best way for her to deal with that is by paying herself a salary (generous if she wants) as a contractor, then treat the rest of the proceeds as profit to be divided among the investors.

+1

If you share the risk, you should share the return. If not, not. Not enough info to make a judgment.

[LinusK]

@Skald_the_Rhymer

Note: this story is true in its essentials, but the details have been changed because I felt like it.

I have a cousin, “Sandra,” who is a woman of many talents. In addition to riding about the countryside with her hot strawberry blonde sidekick, righting wrongs and singing songs, she flips houses: that is, she purchases distressed properties, rehabs them, and resells them. One day last year she came to me and a few of her other cousins and said, “All right, guys, here’s the deal. There’s this house in midtown I’ve got my eye one. It’s in bad shape but the neighborhood is good; I can make a nice profit once I fix it up. Thing is, my cash is tied up right now, and time’s a factor if I want to buy it. If y’all each invest X thousand dollars, I can give you a 20% return in about 12 months.”

I trust both Sandra’s intentions and her judgment, so I ponied up the X thousand smackeroos; so did the other two persons she solicited. And she was as good as her word – better than her word, in fact. Three months sooner than promised, she had the house fixed up and sold, and we all got the promised 20% profit. She put quite a bit of her own money into the investment too–about half the total–she supervised the workmen, did the carpentry and painting herself, and so on. My only contribution to the rehab was bringing her a pizza one day when she was updating me on our progress; the same is true of her other investors.

Good deal, right? I certainly thought so. But not everyone agrees. You see, one of the other investors, “Jerry,” chanced to get a look at her books, and so discovered that Sandra had gotten more than twice her investment back, not just 20% more. Jerry’s upset by this. He feels that, since Sandra made back so much money, she should have spread it around to the rest of us, since we’re all family. He’s given her some grief about this and is trying to persuade the of us to join him in the complaint.

I think Jerry’s complaint is bullshit. But it’s possible I’m a chump. Sandra and I are good buddies, and she’s given me plenty of help when I was in a bad spot without ever asking for anything in return. I’d have been willing to just lend her the cash she needed without charging interest; the profit was just gravy.

Incidentally, Sandra and I are the only two investors who live in Memphis; the others are all out of towners. That is why I’m so certain she is the only of us who put in any sweat equity.

So that’s the story. Is Jerry being an asshole who needs to be slapped, or is Skald being a chump who needs a wake-up call?

Jerry’s an idiot. She promised 20% and delivered. If you or Jerry wanted a different deal, the time to say so was back when y’all agreed to it.

Next time, assuming there is a next time, if Jerry wants a different deal, he needs to negotiate with Sandra AHEAD OF TIME for whatever deal he thinks is fair.

Incidentally, what is Sandra’s number? I’d love to get 20% for no work in less than a year.

(JUST KIDDING, of course.)

[Velocity]

Jerry has no right to want more than what he was told he’d get.

[RealityChuck]

She was completely honest about what he’d make on the investment, so Jerry has no reason to complain.

[Satchmo]

@Skald_the_Rhymer

I actually offered to help with the carpentry, but she said “Thanks, but I refuse to be around you and power tools, buddy. I want to live.”

Ah yes. This has the sound of truth.

I voted Jerry was wrong and needed slapped with some kind of big fish. Sandra sounds like one of the good ones. I’d also advise not hanging around Jerry any more than is absolutely necessary and the opposite with Sandra. Life’s too short. 20% return even in 18 months is a really good payoff.

[Enright3]

Skald, did I actually read that right? You checked the boxes for “Sandra is wrong…?”

Sandra promised what was agreed upon. It’s a no brainer.

[TriPolar]

Sandra was in the right. It’s not just the terms of the deal either. She took an enormous risk. She promised repayment plus 20% profit, and she delivered. If she had only made back the amount the others invested plus 20% profit she would have made nothing. If she didn’t get that much back she would have lost money. She could have lost her complete investment plus the combined investments of all the others plus the 20% return for the others. She risked far, far, far more money than Jerry or any other investor, there’s no reason she shouldn’t see the benefit of overcoming that risk.

I am positive that had there been a loss on the sale of the house that Jerry wouldn’t be telling Sandra not to worry about it because she didn’t have to pay him back.

[StGermain]

Chocolate chess?

StG

[Senegoid]

@Skald_the_Rhymer

I actually offered to help with the carpentry, but she said “Thanks, but I refuse to be around you and power tools, buddy. I want to live.”

Then she should have given you an extra piece of the action for not being around with the power tools.

[bengangmo]

I’m willing to bet that the books jerkface saw didn’t include

1. Sandra’s pre purchase research time
2. Sandra’s labour during the project
3. Sandra’s expertise in design and renovation
4. Closing costs

[Skald_the_Rhymer]

@Enright3

Skald, did I actually read that right? You checked the boxes for “Sandra is wrong…?”

Sandra promised what was agreed upon. It’s a no brainer.

I voted for every category.

[sandra_nz]

Woohoo! Almost everyone agrees I’m right for once!

What do you mean…some other Sandra?

[Skald_the_Rhymer]

@bengangmo

I’m willing to bet that the books jerkface saw didn’t include

1. Sandra’s pre purchase research time
2. Sandra’s labour during the project
3. Sandra’s expertise in design and renovation
4. Closing costs

I haven’t seen the books myself; after re-reading the agreement I see no need to. But while I agree that 2, 3, and 4 are relevant, I don’t think 1 is.

[Skald_the_Rhymer]

@Senegoid

Then she should have given you an extra piece of the action for not being around with the power tools.

But what about the 10/bucks I spent on the pizza?

[Emtar_KronJonDerSohn]

@Skald_the_Rhymer

But what about the 10/bucks I spent on the pizza?

Did you file an expense report? How much of the pizza did you eat yourself? I don’t want to be indelicate, but for $10 was it quality pie? Be honest now. (I suspect it was not.)

[Gyrate]

Let’s be clear now - is the cost of the trout coming out of Sandra’s cut or yours?