Investor · Atlanta, GA · Member since 2014 · 415 posts · 299 votes
A BP friendship with @Tom Yung this past summer led to a JV to rehab an Atlanta property Mr. Yung had picked up in a Dekalb County tax foreclosure. The house is located in east Atlanta in the Edgewood neighborhood and was vacant for over a year while the statutory barment process was completed and was vandalized and used as a crack house and a place for homeless to crash. A downside to picking up tax foreclosures is the inability to go inside the house to inspect. The cost to pick up the house, attorney fees, etc was approximately $70,000 and I'm not sure either one of us would've made the investment if we'd seen the inside first! More numbers and after pictures will follow, but I think you'll agree that this one is a doozy!
Bought for approximately $70,000; spent $80,000 in rehab expenses; listed for $245,000 and had a contract for full price the second day listed! Net profit of approximately $73,000 after realtor fees/closings costs.
@Jay Hinrichs Thanks Jay, hopefully we can connect the next time you are in the southeast.
@Scott Young The rehab began October 1 and we had a target December 1 completion date that turned into a mid-January due to a few unforeseen delays - permitting and inspections primarily and a few that I should've foreseen and didn't, but hopefully learned some lessons. Even though the house is only about 1,600SF, the demo took longer than anticipated because of the extent of the vandalism. We went through 6 of the 40 cubic yard dumpsters and also had to replace the roof, which wasn't in the original budget.
The after is great but having the before pictures makes it magical. I've seen Tom's magic before. You made a wonderful improvement to that house and neighborhood! Congratulations to you both!
Nice work, good thing you didn't get inside or you may have had a lost opportunity. Good job and nice work. Keep us posted on the end process. Good luck and success with a continued relationship.
@Pyrrha Rivers Thank you, and yes, @Tom Yung is the perfect partner for a JV - extremely knowledgeable and patient with his Jr. partner!
Also, for those that post Forum questions regarding "how to structure a JV", I'll let you know how we handled it - not saying the best or only way, but this arrangement worked for us. We formed a Georgia LLC (the two members are our "parent" LLCs) that outlined each of our responsibilities, contributions, splits, etc in the Operating Agreement and also transferred the property to the LLC ownership. The Operating Agreement included a Dissolution Statement stating that the LLC would be dissolved and assets/liabilities settled upon the sale of the property. Further, we opened a bank account in the LLC name (have to procure an EIN), made equal payments into the account and paid all rehab and carry costs through this account.
@John Moore Thank you, and I'll provide an update after we close.
@David Begley Thank you for sharing how you structured your JV. As you mentioned, I know it's not the only way, but I think knowing all the steps you took will positively impact newbies to consider JV more partnerships as a possibility knowing this is ONE effective way to go about it. I wonder what structures others have used? and yes, @Tom Yung is very generous sharing his knowledge, patient and kind. Not to mention a great teacher. Good on you to work with him!
Nice job on the rehab. I can't believe it is the same place. How much was the tax lien? Was there a mortgage that was wiped out? These situations always make me wonder what was going through people's heads.
Congrats @David Begley. Did you and your BP partner connect through the marketplace? A BP networking event? A colleague request?
I have met and had the pleasure to work with and meet several people from BP, always curious to hear how people in other market are making their BP connections.