I've been thinking of how to get outside investors to build my portfolio much quicker. I'm not looking for real estate investors per say, just people with an inclination to make more money. Your feedback is appreciated on this. I've thought about finding properties, raising the 25% down from outside instead of funding myself and offering that person a 50% return. For example. 200k property. I need 50k to put down, so I raise that. Pay on the property, and take no cash flow. After 5 years or so, refi cash out and pay the investor 75k and they are out of the picture. Curious as to your thoughts on this. I realize there may be an issue when I go to refi that the property may decrease depending on how the economy is, but I would write the contract to allow an extension of a period of time....What are the down falls you see?
That part "no cash flow" would make me concern. I find that there is either negative or positive cash flow..I've never had a month thay was exactly break even. Personally, I wouldnt sacrifice 5 years of little to o cash flow just to get a deal.
I wasn't saying buy a property that doesn't cash flow...I was meaning taking the cash and dumping it in to the property to build extra equity.
Anyone else have any thoughts on this?
@Nick Britton Thanks for your thoughts on this.
50% return that takes over 5 years to get, is actually more like a 8.45% annual compounded rate of return. I'm not an investor in the sense that I provide cash for deals (I'm buying property and looking for investors like you are). But, putting myself in their shoes... if I were having to lock up my capital for 5 years, I'd at least want to see some cash in the meantime, or a much higher return than 8.45%. Supposedly stocks yield 12% each year on average.
That said, all investing is also a negotiation. Maybe there is someone that could be talked into that kind of deal.
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