Deal or no deal?

Question

Hi RE Experts!

I'm in the process of building a few townhouses in one of Seattle's most desirable neighborhoods with good quality schools nearby and close proximity to... almost everything. But since I'm not a Plus or Pro member yet, I won't divulge any more info.

My question is, I got an email from this company, ashreinvestmentgroup.com, has anyone heard or use them before? This is their offer on their webiste, "We will fund your deals 100% no upfront fees." In return, they want 50% of the profit.

Steve Vaughan · Answer

If they are solely an equity partner, not a lender, I would look into it more closely.  If they are a lender seeking the profit on the back-end as well, no deal.  They would be asking for the cake and eating it to, IMO.

Sandra Han · Answer

Thank you everyone!

Viktor R. · Answer

It really depends what you are looking for. From what I've seen 50/50 split is best for those who are inexperienced, need guidance, and can't manage a lot of risk by themselves. Absolutely look at the terms but my philosophy is that 50% of something is better than 100% of nothing. It what you want out of it that's the most important.

Deena Iverson · Answer

I can hook you up with a hard money lender here in the Seattle area if you need. And, in my opinion. NO deal not for that kind of cost. This HM guy is very creative and might be willing to do some other kind of terms rather than the standard 9 months also. I have connections in Seattle also, if you need a solid builder or Realtor. I can refer. I am from Seattle.

Deena.Iverson@gmail.com

Brad F. · Answer

I absolutely agree with each respondent above. 50% partnership... Everyone has skin in the game.

Sandra Han · Answer

Thanks for the feedback, guys.

My numbers show a return of around 25-30%, if I managed to find a hard money lender who charges 12% per annum, if the project takes a year to complete, I'll be ahead, if the project takes 2 years or a liittle longer to complete, that 50% profit sharing would look good, yes? No?

Brent Coombs · Answer

If they are pretending to be similar to Joint Venture Partners, do they wear half of any loss you make, too?...

Joey Wharton · Answer

50%! That's not a deal unless you have no other means of funding the deal. With a new build you should be able to lock in your budget without surprises, unlock a remodel you can't be 100% of unexpected repair that will eat up your profit until you tear into it.

The only way it would be a deal is if your cost of hard or private money is more than 50% of your profit.

Deal or no deal?

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