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Updated over 6 years ago on . Most recent reply

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Daniel D.
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125
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I have private money, how do i structure the deal?

Daniel D.
Posted

Hey Everyone, 

So far i have purchased a few rental properties with my own money, and renovated them myself and so on. 

I want to start scaling a bit quicker, and with your own money its a bit harder since you have to find the properties, renovate, refinance and hopefully get some money out of it and then look for another property. 

Currently i have a few places where i can get private money which i want to utilize. 

My question is how do you structure a deal with a partner? These partners don't want to be in for the long run, they just want to put the money up front get a good return within 2-3 months and get their money back. 

How does this work? Basically im trying to figure out what to offer to the partner... I am not really sure if im asking this question correctly :(

Thanks

Most Popular Reply

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Sasha Mohammed
  • Lender
  • Costa Mesa, CA
231
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314
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Sasha Mohammed
  • Lender
  • Costa Mesa, CA
Replied

@Daniel D. it would probably be more appealing to your investor if YOU put the down. That way you have some skin in the game. 

I'm still a little confused as to what your question is here, but if you're looking to rehab properties without utilizing your own funds, I would GUESS (unless you're experienced or have an experienced rehab team) that 2-3 months is probably not a long enough window to complete the project, let alone get a cash-out refi and pay off your "investor". 

** If the project completed with a cash-out refi would not profit enough to pay back your investor, then it probably isn't worth moving forward with that project, and i would look into another property with higher returns. Don't get stuck on one property, run the numbers and make sure the juice is worth the squeeze. **

There are plenty of lenders out there that specialize in such rehab projects, and will lend you not only funds for acquisition, but also rehab funds. and they'll give you the time needed to finish the project (12 months, or longer). Plus, that's what they specialize in, so you have a bit of a safety net in that you're not jimmy-rigging a deal together with an individual investor. 

Hope this helps!

  • Sasha Mohammed
  • [email protected]
  • 949-351-1338
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