Hi I'm Brendan and am new to real estate but have been studying very diligently for the last 6-8 months. I have been wanting to focus on rentals with the occasional flip. My biggest thing I have been looking into has been hard money lenders and what kind of rates and such. So I have found a couple properties that I really like and was going to put an offer on but something huge may have come up to give me a giant headstart.
My father in law started an rental business with my wifes ex about 6 years ago. In those 6 years they only have 2 rentals that are local and being rented as we speak. Just so happens they want to get out of the business and move. Well my father in law would prefer to not sell and keep the business. With that being said I am having a sit down with him this week to discuss the opportunity to take it over. He has been a silent partner in the business and just cashing checks.
With that being said, if he were to give me the opportunity to take it over what are my first steps to get the ball rolling and get comfortable? I want to scale what they already have fairly quickly but I do not know the first steps to get the train moving. Any tips or ideas to a brand new investor would be amazing. I want to create generational wealth and change my family tree for the better! Thanks in advance.
Hi @Brendan Osborne , this is exciting for you dude!
They key question that pops up in my mind is: how does the money work here?
If they would just be deeding the properties over to you (or you + dad) and they are owned free-and-clear (no mortgage or debt on them) then that's pretty easy. The second question is, to they expect anything in return? If so, where does that money come from?
If the houses are in solid shape and the timeframe works for everyone, you could purchase it from them and use a loan (ideally conventional right now, but a commercial loan would work, too) to purchase the homes. That would allow you to have a great, low interest fixed-rate debt on them and conserve cash for other investments.
Ultimately you and FIL's agreement can be between the two of you, or it can be official, usually in the form a management agreement, operating agreement (of an LLC), or some sort of more complicated agreement like a Joint Venture.
Occam's Razor is a wise guide here: the simplest solution is almost always the best.