Need help analyzing my first deal - 1.4 million I would take 11% interest

[David H.]

Hello, 

I am looking to be partial owner of a property that is 2 blocks from the beach in Southern California. I would be sinking most of my earnings of $150,000 into this property to own 11%. The property would be purchased for 1.4 million. It is a large lot of 15,000 sq ft. Right now it has 4 units on it. Its possible to convert the front home which is on a popular street for commercial space into retail and get more rent. But as it stands now it may just be a rental. 

Purchase Price - $1.4 million All case ($150,000 my share for 11% interest)

Costs to rehab $100,000

Total of 4 stand alone homes 

Unit #1 - 2 bed 1 bath 780 sq ft - Estimated $1800 a month - $2000

Unit #2 - 1 bed 1 bath 500 sq ft - Estimated $1450 a month - $1500

Unit #3 - 1 bed 1 bath 500 sq ft - Estimated $1450 a month - $1500

Unit #4 - 1 bed 1 bath 540 sq ft - Estimate $1500 a month 

Projected Rent - $6200 a month

Property Tax Rate - 1.0612% or $14,840 yr - $1,236.67 per month

Estimated Insurace & Flood - $2000.00 a year - $167.00 per month

Property Management @ 8% - $496.00 per month

Electricity (Tenants pay???)

Water (Tenants pay???)

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There is the possibility of putting non-permitted rentable trailers in the back that will rent for $1500 - $1900 for a potential additional rents of $3000. The other potential is to convert from house and rent as restaurant for $3.00 a sq ft. 

Looking at this property that has a large lot and being close to the beach as a possibility. Please let me know what you think and what I am missing.

[Steve Vaughan]

11%= you have no real vote and you don't matter.  What if the other member/partners decide to just vote you out return-wise?  Minority interests in small businesses are extremely risky. So many other things you can do with $150k @David H.!