New to Real Estate · Kalispell, MT · Member since 2018 · 10 posts · 3 votes
I am moving to northwest Montana where buying a house is expensive because it is close to a resort town. How exactly does having an investor work? I have the "time" part of working with rentals but not the money. If i used an investor what money do I make in that deal?
@Micah McAlister if you're using an investor to buy a rental, you would pay them monthly payments, like you would a bank, and you make money by charging more rent than you pay the investor every month. Then at some point, within the next few years, you will probably have to pay the investor the remaining balance, so you would refinance the property through more traditional funding and pay the investor off.
@Micah McAlister looser lending requirements, lower down payment, the property wouldn't pass an inspection for a conventional loan. There are a number of reasons that you wouldn't, or couldnt, use a conventional bank.
I am moving to northwest Montana where buying a house is expensive because it is close to a resort town. How exactly does having an investor work? I have the "time" part of working with rentals but not the money. If i used an investor what money do I make in that deal?
If you can find the deal, do the work and/or manage the job, consider partnering with someone that has the cash (or credit) to fund the deal. The profit split is whatever you work out with your partner/investor and will largely depend on how much work you're doing for your portion, how much cash the investor is laying out, how good the deal is, etc. 50/50 is never a bad place to start if you're not actually performing the rehab yourself. If you're doing the rehab yourself I'd charge the partnership a fair price for the work and then split profits outside of that. It's ultimately cheaper later on to borrow money instead of splitting deals but in the beginning it's not a bad way to go.