Houston, TX · Member since 2016 · 36 posts · 4 votes
I am currently looking at 500k and below properties. I have my eye on one particular property at 500k. It is a newer MF, but that would be me putting up my entire 100k for the down payment. I feel that there is a better way to leverage my 100k investment. Any suggestions to get the most bang for my 100k investment?
Investor · Asheville, NC · Member since 2011 · 833 posts · 499 votes
10y
Hey @Account Closed, if it's a really great deal, consider bringing in private money partners to minimize your cash outlay. Maybe you put in $50k, and offer half to another investor?
Investor · Asheville, NC · Member since 2011 · 833 posts · 499 votes
10y
@Account Closed said, not necessarily.
Since you've found the deal and will most likely be managing the property, a passive investor should not expect to receive an equal stake.
However, it's a bit more complicated than just raising the money and paying them interest. Your investors will need to know their interests are secured, either with a lien against the property or with an equity stake in it.
There are a lot of nuances, and if you seriously intend to purse raising outside capital, I'd definitely recommend speaking to a real estate attorney. I imagine you could find a referral for one right here on BP. Let's try it...
Are there any Real Estate Attorneys based in Houston, TX that would be able to offer Arlen some advice properly structuring a private capital raise?
Wholesaler · Houston, TX · Member since 2015 · 78 posts · 30 votes
10y
Arlen Childress is this your first property? Ive heard this line before. "What would you do with 100k?"
Buy 1 property at 100k or buy 5-100k property at 20% down each.
Also dont fall in love with the deal if its really good. You should be able to finance it with a hard money loan.
Maybe youre a pro or a newbie but with 100k find a jv partner and learn the ropes a go thru the process a few times with 20k each time. But im a newbie myself so 🤔 take that for what its worth.
If you must buy and your gut says so then do it all in.
Good luck!
Specialist · Carolina Beach, NC · Member since 2016 · 390 posts · 496 votes
10y
I would rather mitigate my risk as a new investor by risking 20% of my bank roll on my first deal than risking 100% on my first deal. Use it to fund five deals at $20,000 each and learn from each one.
Just my newbie opinion. Good luck.
Rental Property Investor · St. Louis, MO · Member since 2014 · 741 posts · 424 votes
10y
@Account Closed You have a chunk of cash, this is terrific. You are looking at multi family, which generally spreads the maintenance costs. Tell us more about the deal.
Rental Property Investor · St. Louis, MO · Member since 2014 · 741 posts · 424 votes
10y
@Account Closed No matter, there is always another one. Everyday I print out a listing and go over the expenses/income/ leverage plan and find my offer number. This practice helps me prepare for finding the right deal, as my focus is always on the cash flow and there are a couple of ways to make it happen. Last year I found three.
Göteborg, Sweden · Member since 2013 · 60 posts · 2 votes
10y
Hello Arlen!
I have not started to invest my self yet but as far as i have learned is the following:
If you want to go alone at it, u are better of using smaller amout for downpayments for several properties than just one. And now i am not talking about to max out your 100 k on 5 properties with a 20 k down, rather that you go for like 2/3 properties ( i assume that you will buy 1 each and not both/all three at the same time ) and with each one you will have escrow/earnest money and reserves for repairs and budget for future repairs/fix.
I mean if you would buy 1 property for 100 k and you do not have more money and you would back out of the deal becouse of your findings during due diligence and you are not getting to a agreement with the seller for a reduced price or that you simply do not get your loan from the bank when they do their own due diligence then you are out of your due diligence money. ( since you have a pretty big DP with 100 k, your due diligence will cost more than a smaller estate ) and you will also be out of your earnest money if your not having the agreement that if you fail to bring the funds your escrow money will be return ( can not remember the name for it ) but this should not be a problem becouse you should never go forward with a contract that not has this option built in it.
So now to the point: I do not know the exactly sum of money you will be using for your due diligence but you will be out of that money and will not come back with the same amout ( 100 k ) for your next deal and if you would go through with the deal you will not have the reserve money becouse all of your money is in the downpayment.
This example is just for you if u do not have extra sources for reserves and due diligence and the small other stuff ( depends on the contract with the closing costs and permits/contracts ). But the. again, even if you have those costs covered i would personally not go in with all my money for 1 100 k deal. Then my investing would come to a stop and i would not want that.
*Summary* Don't use all your money for 1 DP on 1 deal and make sure that u have extra money for all costs for every deal so you keep urself floating after each deal.