Buying LTR with friends/family.

7 Replies

Hello BP. 

This is my first post. 

Question about buying LTR with friends. 
I along with all my friends play poker for a living. Most of us have the majority of are net worths sitting in safety deposit boxes. 

I'm looking into some Long Term Rentals all around the country. 

Since we are all self-employed its a little more difficult to get approved by a bank so we are looking at owner financing since coming up with a down payment would be no issue.  

Questions:
1). How do i go about structuring a "fund" or LLC using multi peoples money? (Is this referred to as syndication??)
2). When using owner financing is there penalties for paying the property off early? (lets say a 100k property in 3-4 years?) 
3). I have seen on CL some owners will just carry for 2-3 years then you switch to a standard bank loan. How does this process work? Does the bank need proof of income or is showing that we have made every payment to the owner for the last 2-3 years good enough? 

Thank you all kind people!! 

**Not sure if im posting this in the right place. because all i see is my title. 

Hello BP.

This is my first post.

Question about buying LTR with friends.
I along with all my friends play poker for a living. Most of us have the majority of are net worths sitting in safety deposit boxes.

I'm looking into some Long Term Rentals all around the country.

Since we are all self-employed its a little more difficult to get approved by a bank so we are looking at owner financing since coming up with a down payment would be no issue.

Questions:
1). How do i go about structuring a "fund" or LLC using multi peoples money? (Is this referred to as syndication??)
2). When using owner financing is there penalties for paying the property off early? (lets say a 100k property in 3-4 years?)
3). I have seen on CL some owners will just carry for 2-3 years then you switch to a standard bank loan. How does this process work? Does the bank need proof of income or is showing that we have made every payment to the owner for the last 2-3 years good enough?

Thank you all kind people!! 

Danger Will Robinson! I *would not* buy with friends or family. Either they invest in you, or you in them, with clear terms. Otherwise you will end up with a lot less friends and more enemies. As for your questions, that all depends on what you structure with the seller.

disregard the last post, i didn't know it took time to get verified. 

Yes they would be investing in me, I would be finding the properties and making the deals. How would i structure it? LLC?

You don't need an LLC to invest in properties. What you do need is a clear written agreement on when/how funding will occur, what rate of return, default, etc. I suppose if you were looking to abscond with the money of your friends, you could create an LLC, pay yourself an exorbitant salary and then fold up the tent when the investor funds run out ;) Since you probably don't want to do that, just put together a good agreement that protects everyone. I would suggest having an attorney draw something up, and everyone having their own attorney review. I like not using lawyers a lot, but in this case you have personal ties to these people.

I would join Legal Shield and speak to a real estate attorney about how to proceed.

Joe,

Do you have Legal Shield?  How do you like it?  How are they with real estate issues?

Thanks

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