$10k - $20K Partners for Cash Flowing Multi-Units

[Thomas Fish]

(My friends used to beat me in Monopoly when they ganged up on me and worked together to get all the good properties. I got to thinking about this today while pondering ways to take down some of these great, cash-flowing deals I've been writing options on here in Michigan.)

What I'm looking for is $10k - $20K partners to come in on these deals for 50% of the equity and 50% of the cash flow. I'll put up the rest and manage the properties.

A couple examples: a 7 unit, 100% rented, partner pays $20K gets $1000 /mo cash flow plus 50% equity as it builds.

A 15 unit, 100% rented, partner pays $20K, gets $1800/mo cash flow and 50% equity as it builds.

An 8 unit, 100% rented, partner pays $20K, gets $1000 per month cash flow plus 50% equity.

I have a bunch of them, can't take them all down myself. If interested, please write me at my regular email address (bigzoo) and let's talk about the possobility of doing some of these.

Thanks.

Tom

[Jon Holdman]

You've left out some key numbers, like what you're paying for this place and the terms on the loan. Is the property being used to secure the loan? Are you personally signing on the loan?

Given $19,200 in annual income and 38%, I get that the investor is putting in about $50,000. You're putting in $10,000. I get that you've managing the property and are entitled to a management fee. Seems like that should be included in the expenses and then you and the investor should split the remaining cash flow 83 (investor, $50K on the line) and 17% (you, $10K on the line). Assuming a typical 10% PM fee (high on 16 units, I think), you'd be getting $760 a month in management fees ad another $6,400 for your percentage ownership.

Now, if you're personally liable for the debt and the investor is totally off the hook, perhaps your ownership is higher than 17%. And, perhaps you're entitled to something more, since you're found and bought the deal. But 50%? When you have little at risk?

The 50% rule, which certainly applies to a 16 unit, $475 a month deal would put NOI at $3800 a month. Part of that is the PM cut. Just a wild guess, but I'm guessing the purchase price at $240K, with a 25% ($60K down payment. Perhaps only $200K, with 25% down and $10K in closing costs. $150K at 6% for 20 years is $1075 a month. That leaves $2725 a month in cash flow.

Don't know if my guesses are accurate. Be helpful to have a few more numbers. If they're in the ball park, that's a pretty interesting deal. I suspect I'm low on the price (2% rule would put price at $380K, but I'm not sure how you buy a $380K property with only $60K into it), so I'm skeptical of your cash flow projections. How about giving us the rest of the numbers?