I recently came across a deal on a duplex that has awesome numbers. Come to find out, the owners are actually selling a package of duplexes: 3 others for a total of 8 doors. I thought it was a single duplex at first and I could handle it, but the four duplexes is too good of a deal and I do not have the capital to lay down.
I want to get an investor in my area (Atlanta) to go in on the deal with me. How can I do this without getting screwed over? I have multiple avenues to find an investor, but I don't want to give the deal away without getting at least something in return other than "valuable internship experience."
How should I approach this?
Thanks for any help
Edit: This is my first deal ever
I would first start with figuring out how much capital you’ll need to take the whole package down and renovate it (if needed). Have realistic expenses for everything including closing costs and due diligence. If it were just you how much would you need? Ok, now that you have that number back out how much you can contribute (5%, 20%, etc.) and the kind of returns for you and for an investor. You can offer debt, just paying someone a fixed rate of return for their money, I would assume 9-12% interest. You can also use debt and equity, they get a share of the deal and associated reruns from both cash flow and sale. I’d use 12% cash on cash as a minimum return or a 15% IRR if it’s over a period of years and you plan to sell. That’s just a suggestion and each investor cares about different things, so structure accordingly. Now that you know what you need and the options looks at what you can offer. Maybe you can put up 30% of the capital and do 100% of the Work. Try to find someone who will give you 70% of the capital for a 50/50 split. Your goal is to find a way to make a deal that’s attractive to a private investor or a RE investor so that the returns justify the risk. It’s about structuring a win-win deal for everything. It’s your job to put together something that works. Maybe you borrow money, maybe you start an LLC together, etc. You need to know the numbers for different scenarios. Good luck!
I might be interested in this deal and might know of a couple of investors who might be interested. Message me some more details and we can try and set something up.
That would be quite the first deal. My suggestions seems obvious ...
Get everything in writing. Get a lawyer to create and look over all aspects of the deal for your protection as well as the protection of the other investors.
Recognize what you do not know and do not guess at what you do not know. Use this site but recognize there is a range of expertise on this site and some people come across as being more of an expert than they are (I will indicate I have been involved in RE investing a long time and have never closed on close to 8 doors at once so that is quite a first purchase if it works out for you).
I hope this works out for you. Good luck.
@Jarrett Babcock Is this a deal on the MLS? If that is the case, I doubt this deal will be around if it's as good of a deal as you say it is. What also do you mean by getting screwed over? I don' t think it will be hard to get a partner on it but you are going to have to get it under contract before others discover it.
If you are new to this there is also the possibility that this deal isnt as great as you think it is.
@Jarrett Babcock if it is a good deal, the money will follow. I'd be interested in hearing more about the deal. If the numbers do make sense, I'd be willing to partner or work something out together. There are more than one way to skin a cat as they say.
@Jarrett Babcock - I'd be glad to help if you'd like. You an start by posting all of the details of the deal here and let a few experienced investors give you some feedback. Don't have to put the address of all the units but enough to help you analyze it. Things like the area, bed/bath combo, rental income, current condition, occupancy, seller motivation, asking price, expenses, etc.
If it's actually a good deal, I may be interested. If not me, I will for sure be able to introduce you to another experienced investor in Atlanta that can help.
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