partnership with attorney

Just wondering if any of you have formed a partnership with an attorney in exchange for upfront closing costs. I'm trying to think "outside the box" and need help determining if I can create a profitable partnership for myself and an attorney.

IE: Mortgage 100K 7% 30 years $665.30
Mortgage 106K 7% 30 years $705.22
I used and additional 6k for 2 closing costs, the 2nd closing is to refinance to pull out our initial down payment to reinvest in another property.

If we do not pay 6k in closing costs our cash flow would increase by$39.92/month.
What do you think...is there anything here I can work with? I'd love to hear your feedback.

Thanks:)

Edited: 06/26/2010 at 10:06AM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Oct 15 '09, 10:08 PM

I'd rather partner up with the DEVIL himself! There are no "partner type attorneys" imo. Just billable machines with no feelings. I guess my true feelings have come out. And this is the way I feel about the attorneys on MY SIDE!! Imagine what I feel about the others...Rich

Edited: 06/26/2010 at 10:06AM

Nick J.

SFR Investor · Scottsdale, Arizona

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Icon_minipost Oct 15 '09, 11:09 PM

Rich is right, attorneys are always on 'their' side even if you are their client. It seems like every contract that has had an attorney attached to it is more protective of the attorney than it is for you.

Edited: 06/26/2010 at 10:06AM

Heather Pelletier

· Massachusetts

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Icon_minipost Oct 15 '09, 11:19 PM

OK, thanks for the advice. Just trying to figure out ways to minimize any upfront costs.

Edited: 06/26/2010 at 10:06AM

Nick J.

SFR Investor · Scottsdale, Arizona

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Icon_minipost Oct 15 '09, 11:22 PM

what upfront costs are you worried about? Most of my deals I do without ANY out of pocket costs at all.

Edited: 06/26/2010 at 10:06AM

Vikram C.

Real Estate Investor · Phoenix, Arizona

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Icon_minipost Oct 15 '09, 11:30 PM

Heather, it would depend on the attorney. There are many ethical and decent lawyers out there and you would have to use your judgment to decide whom to partner with, whether an attorney or anyone else.

Courts are also stricter in their interpretation of contracts when they are dealing with a party who is a lawyer. Contracts are always construed against the lawyer when there is some room for interpretation.

State bars also have strict a strict code of conduct for lawyers, so you will have to do this carefully. For example, your attorney may have a conflict of interest with you if you are doing business with him with respect to a transaction in which he is your attorney. In such matters, the attorney will in all likelihood have to refuse your partnership deal or stop handling your matter as your attorney.

Finally, I must say that most stereotypes of attorneys are based on litigators, who are actually a minority of the lawyers out there.

Edited: 06/26/2010 at 10:06AM

Heather Pelletier

· Massachusetts

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Icon_minipost Oct 16 '09, 12:32 AM

Thank you Vikram,

I have to agree with you...not all attoryneys are bad. I acutally have a good friend whose husband is a real estate attorney and I would certainly consider approaching him. I'm having a hard time trying to figure out if it would save us any $ in the long run. If anyone has any input how I could possibly structure a partnership that would be great.

Nick, as far as up front costs go. I see you focus on subject 2. That explains the no out of pocket for you. We primarily focus on buy and hold and usually seek REOs. We are just starting out so we have limited amout of cash. We usually put 20% down, refinance and pull out our initial down payment so we can turn around and do it again. This is were closing costs become expensive because we multiply them x 2.

Edited: 06/26/2010 at 10:06AM

Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

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Icon_minipost Oct 16 '09, 01:10 AM

Originally posted by Heather Pelletier

... We usually put 20% down, refinance and pull out our initial down payment so we can turn around and do it again. This is were closing costs become expensive because we multiply them x 2.

I would recommend looking at getting a reissue rate for title insurance; that would lower that part of closing costs. Another component of closing costs can be real estate transfer taxes; on a refi, theses should be zero. Lender fees, recording fees for the mortgage - those will still be there.

Rather than partnering with attorneys, look at the discounted rate that you can get for the title policy.

Edited: 06/26/2010 at 10:06AM

Heather Pelletier

· Massachusetts

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Icon_minipost Oct 16 '09, 01:12 AM

Good advice,
Thanks Steve:)

Edited: 06/26/2010 at 10:06AM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Oct 16 '09, 03:08 AM

Vikram- I'll stay with my previous post. "ethical and decent" they may be, looking for a win--win with you? I seriously doubt it. Billable hours man, imo. Rich

Edited: 06/26/2010 at 10:06AM

Heather Pelletier

· Massachusetts

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Icon_minipost Oct 16 '09, 05:12 AM

Good advice,
Thanks Steve:)

P NW

· OR

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Icon_minipost Oct 16 '09, 05:35 AM

I firmly believe that real estate partnerships are a bad idea.

As for lawyers, I have known 2 of them whom I would trust to do business with. Nice guys and very ethical. Heck, I had a lawyer for a tenant who I would do a deal on a handshake with.

I've also know a whole bucketful of lawyers that I would be double cautious about even saying "hello" to.

But lawyer or not, real estate partnerships often fail. Plus, if it is a good deal, why should you share the profits?

Edited: 06/26/2010 at 10:06AM

Heather Pelletier

· Massachusetts

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Icon_minipost Oct 16 '09, 06:23 AM

Great points,

Somthing I was pondering, not one of my greatest ideas:)

Edited: 06/26/2010 at 10:06AM

Raymond B.

Real Estate Investor · Wallingford, Connecticut

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Icon_minipost Oct 16 '09, 07:36 AM

Read this post twice, and learned a few good things.

Thank you everyone, for being so helpful.

Edited: 06/26/2010 at 10:06AM

Eddie Ziv

Real Estate Investor · Studio City, California

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Icon_minipost Oct 16 '09, 09:15 AM

Originally posted by Rich Weese

I'd rather partner up with the DEVIL himself! There are no "partner type attorneys" imo. Just billable machines with no feelings. I guess my true feelings have come out. And this is the way I feel about the attorneys on MY SIDE!! Imagine what I feel about the others...Rich

Rich, I take you are a great fan of shakespeare's "Henry VI"... :wink:

Edited: 06/26/2010 at 10:06AM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Oct 16 '09, 10:28 AM

Of course. Rich

Edited: 06/26/2010 at 10:06AM