Updated over 12 years ago on . Most recent reply
The Ultimate Buy and Hold Strategy
So here's the skinny(do people still say that?
So I have 2 friends with money and we've put together a pretty good plan for building a buy and hold business and them getting safer, secured returns on their money. They want to each invest in two aspects of our buy and hold model. We plan to acquire 2 and 3 family rentals in nearby urban neighborhoods. These properties are not in war zones but the next step up. So an average 2 family acquisition could be for $80,000 and need $50,000 in repairs. These have an ARV of $225,000
The rents are $1350 per unit or $2700 total
So one partner will fund the $130,000 acquisition and rehab for 12% with the interest accrued.
The next partner would fund $140,000 for the long term and receive monthly interest payments for 5-10 years of say 8%. I'm thinking we'd have to do some type of amortized loan over this term because my goal would be to hold these properties for a very long time (15 years) and would eventually want to pay them way down and use some (not all) of the equity for new acquisitions to get better return on equity. They will be strictly funding partners. I will handle every aspects of the business, itself. I'd like a little advice on how to structure the second (long term) partnership and what everyone thinks of the plan, in general. Thanks and God bless.