As a Solo 401k investor, the LTV requirements for non-recourse loans is putting a current possible deal for me a bit out of my price range. There is a lot of opportunity in a particular property I've been looking at, and I don't want to let it slip away but it's pushing the limits on what I can afford or am willing to put in - leaving very little room for extra capital needed for extra rehab/holding costs that may come along.
I thought this would be a great time to partner on the deal I'm curious how to go about sharing the details of a great deal with someone I don't know. What would keep an unscrupulous individual from stealing the deal once they have enough details to find it? I know most of us here at BP are stand up folks but sad to say, I've learned the hard way many times, to default to a defensive stance.
At some point I know I would have to reveal enough of the deal to make the potential partner comfortable to agree or not.
It seems a bit like a hostage swap - at some point you just need enough of a comfort level to let it go and trust the other guy to not be a dick.
Thanks for any advice you can give on this matter.
Tell us about it...
@Craig Leininger How about just getting it under contract with contingencies in place that allow you out if you're financing doesn't work out? Also, I'm not sure how you were looking to find a partner, but I can see your concern if you were going to blast it out to a bunch of unknown potential partners. Personally, I would be approaching some of my closer relationships that I already trust that are interested in investing. Then you have a pretty good comfort level that they won't screw you over.
@Jane A. - Good suggestion. That would work but being new to investing, I preferred the partner was local with a little more personal interaction.
@Brad M. - Thanks for the feedback! It's not so much a matter of getting the loan, I'm more worried about exhausting my capital on the down payment and expected rehab costs and then being stuck near the end because of some unforeseen issue that costs me another 5-10k. I have contacted a couple of my contacts to see if they know of anyone. My post was more of a proactive question as I pondered the "what if" I couldn't find someone in my network.
@Craig Leininger Just so we're clear....... you're looking for a partner with capital but also with experience? It might help if we know what kind of experience you want this partner to have.
What I meant, but didn't make very clear, was a contingency that your particular plan for financing didn't work out. So your contingency wouldn't be on getting any loan, but a loan on your terms, which includes this partner at a certain equity level. Point being get it under contract and no one can swoop in and take the deal from you if that is a concern.
Hi @Doug W. - Thanks... Yes, both would be required (capital and experience). This is a fix/flip so in terms of experience level, I would be interested in talking with anyone with more than 5 of the same types of deals in their portfolio. But I'm not sure how this would change the way I vet those individuals. To clarify... my post wasn't a call to potential partners, only a question on how to approach establishing those relationships from a trust standpoint.
@Brad M. - Understood. Thanks for the suggestion.
Thanks for the clarifications @Craig Leininger .
Have you been to any local REIA meetings? If you have one near you maybe you should consider reaching out to the group's organizer and saying "Hey. Is there anyone in this group who you think would be interested in partnering on this deal?" Of the 4 local REIA's I'm active with they all have organizers who seem to know all of the regular attendees. My assumption would be that he/she could help make a connection and give you that extra layer of a quasi background check.
In the past I've always funded my deals using my own capital. Now though for various reasons we're in the same process you are looking for equity partners.
What I've done is create a comprehensive overview of the project on slideshareDOTnet. The overview has a brief description of the property and includes population/income demographics (one sentence) business plan, sales comps (lease comps if its commercial) and an entry and exit strategy along with historical performance experience.
The slideshare also includes a couple of pictures, and consists of 9-15 pages depending on the project. Its enough information for anyone to give you their initial yeah/nay.
When I have a conversation with someone that says they may have some interest in investing in a project I simply email them a hyperlink to the overview along with some of the details in my email that I also want to share but aren't included in the slideshare.
PM if you want to take a look at one of my overviews, it'll give you a pretty good idea of how simple it is to protect your deal but still communicate a lot of information.
@Christopher Telles - Thanks... great idea. I'd love to take a look at what you've cooked up.
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