Real Estate Investor · Saginaw, MI · Member since 2008 · 136 posts · 24 votes
(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.
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?
So far, many have asked for details and none have been provided. I also asked for details via direct email and never received any. If you are serious about doing business here, you will find it tough going if you can not follow through.
Will, I hear ya. I apologize for the delay on the info in March. I have been actually DOING these deals for the past two weeks and will be tied up for the next few days as well. But I will post the properties available for April and all the numbers, details, etc. within the week. Thanks. Tom
Thanks Will. I can write you directly with specifics of each deal so you can break them down. I've erred conservatively, the numbers come out as I've said. Each deal differs. I will send specifics to you. Thank you.
OK, waiting for your email. My email is in my signature.
-Will Barnard
Hi again, everybody. I will be writing to you directly today regarding a couple partnering deals that are available right now. All the ones in April were sold and closed, so what I will be sending you will be what is available right now in May. For those of you who I can't write directly, here is one deal that is available:
18 units consisting of two 5-plexes and one 8-plex. 100% occupied and cash flowing nicely. The two 5-plexes are 100% college-student housing. The numbers look like this:
Total price: $340,000, with $35,000 down ($25,000 from you as a partner). Gross Rents are $7505 per month. Expenses, including land contract payment, is $3400. So the net cash flow is approximately $4000 per month divided by 2 = $2000 per month each.
If interested, and for more details, please write me directly.
Ok, there is something definitely wrong with this thread and the server. The only way to view it to open Tom's profile and find it there. Is this thread being censored or something???
OK, I finally got the deal sent direct to my email and have had a back and forth discussion about the numbers. As posted both here in this thread and by email, the expenses are NOT factoring in long term averages which for aprtments with these rentl amounts, will be somewhere close to 50% when operated proficiently. Dr. Fish is going off of numbers from the previous 18 months or so and contests that this property woulod be liquidated inside of 10 years, thereby avoiding major capital costs.
I don't see this property having the cash flow as presented and if and how much you can sell for sometime in the future is never known so worst case scenarios must be used for investor protection in my opinion.
Each deal is different. And like every other equity type of investment, they hinge on supply and demand and a host of other variables. I've never used or bought into the "50% rule" on expenses. In some cases, I am sure it might apply, but certainly not in every case or as a dependable rule of thumb. My suggestion is this: if anybody is interested in bringing $10k - $20k to the table and partnering on a multi-unit deal, keep in email contact with me. I'm doing 2 per month and will always have something fresh in the hopper to mull over. Thanks!
And also, Will, I am glad you brought up worst case scenarios in context of reselling a property. In a land contract scenario with, say, a 7 year balloon, the worst case scenario if it doesn't resell before the 7th year, is that the contract expires and the buyer walks away. If the buyer put in $20k and took out $1500 per month for 7 years, that's $106,000 back on a $20k investment, plus the $20k back too. Not bad for a worst case scenario. / Granted, we can also argue that the property might need capital improvements during the life of the contract, but (a) the expenses include adding to a fund for such repairs, and (b) we're talking about 4-10 unit complexes in which such capital improvements--roofs, furnaces, etc.-- are afordable within the fund's capacity. / So as I've said, each deal is different, each property is different. If it's a direction that someone would like to pursue, please check out what I have each month. Thanks!