So my sister and I want to jump into real estate and are looking into the Birmingham area for our first purchase. The reason for this is because running some napkin numbers it appears to cash-flow way better than anything in Florida (which doesn't really at all).

My question is as far as getting a loan goes, how difficult would that process be to accomplish with two people? Should we look into forming a partnership? We have the 20% down payment and both hold steady jobs with no debt. 

Thanks,

I doubt it would be difficult at all. Just put EVERYTHING in WRITING. You need an agreement IN WRITING between the two of you. 

Start calling banks and find out!

A couple things to consider- are you going to acquire and borrow against your investment as individuals or a business of some kind? Chances are you'll have a hard time doing it through a legal entity, at least until you've got a few deals under your belts. 

You can have a contract between you and your sister for how the deal pans out, who does what and who makes how much, but one of you could be solely responsible for the debt, which might simplify the process. 

Best of luck!

Do you mind showing the numbers? There could be 20 reasons why it won't cash flow. I would start calling banks and see what they offer. You don't need an LLC to start a partnership and personally I would avoid it if it's your first property.

Cool, so lending shouldn't be an issue. Me and my sister are already working on an agreement and have a good history of partnering on things together

@Jaron Walling , I don't mind showing the numbers, here's an Excel sheet I made for the area, I just started researching the area so it's got a lot of work left before it fully comes together. https://docs.google.com/spreadsheets/d/1UCiNFd_gGycV8YVyABf7163qvc4ZqBHpgvpz77Wl8vY/edit?usp=drivesdk

I looked at your spreadsheet. Why did you not include the rehab and closing cost in the total initial investment? 

25% for vacancy? That's crazy high. It looks like the spreadsheet needs some tweaking. 

Thank you for posting this @Juan Carlos Castillo . I'm pretty new so this kind of stuff really helps out a lot. I look forward to seeing how it works out for you and learning from all the other great people commenting here. 

Please keep us posted about how it's going buddy, and have a great day! 

I would see where you bank and discuss the loan and also speak to a local credit union. 

Originally posted by @Jaron Walling :

I looked at your spreadsheet. Why did you not include the rehab and closing cost in the total initial investment? 

25% for vacancy? That's crazy high. It looks like the spreadsheet needs some tweaking. 

 Yeah it does need a bit of tweaking, no rehab was taken into account because I haven't had anybody go and inspect the property. but from the pictures it doesn't look like it would need any.

As far as closing cost goes, I think I have it set at 4% purchase price. what would you recommend to allocate for closing costs?

@Juan Carlos Castillo 3-4% for closing. It’s save practice to have $5k for repairs and deferred maintenance issues. Hopefully it’s less.