Closing attorney says my plan will not work

[Account Closed]

Hello BP,

I recently met with a local closing attorney and told them about my plan to buy renovate and resell houses. I mentioned the letters and marketing I have been sending out to targeted houses (acquired by driving for dollars) and have a few appt's set up in January with motivated sellers. He then asked, How are you going to buy the house? With what money? I said I have no idea yet and I feel the most important thing was to first contract a property at a deep discount. Once I have that contract, then I could call around to people I know in the area and try to partner. 50/50 Joint venture. We split the profits down the middle. I market for the deals, I meet the sellers, I contract the deal, I renovate the house and resell it. That is all a lot of work. But they have the money to make it happen and want to be a part of something like this. Something local, improving neighborhoods/communities, providing local jobs and hopefully making a 10-15% return on investment - higher than they could get elsewhere. 

He didn't really think anyone with money would be willing to do something like this and that since they would be putting up 150-200k or so, they should get more of the profit. Really?

He also said that he thinks maybe for the next year or two, I work really hard in my business and save up the 200k so I can do it all myself. I told him that doesn't make sense to me considering most successful business owners I know got money from investors to start their business (my dad being one of them). It would take me YEARS to save up that much.

Any thoughts here BP?

Thanks.

[Eric M.]

50/50 partnerships are very doable.  The issue you are going to have is if you are "hopefully" going to give a return of 10-15%.

For most investors, that is not nearly enough for taking 100% of the financial risk on a new rehabber.   When a new investors says hopefully 10-15%, I think I am probably going to be lucky to break even.