I seek your thoughts: loan in return for architectural service

[Paul Kouri]

I would love your opinion of what I believe may be my unique "unfair advantage" and a proposition I made to a client.

THE FACTS:

. I am an architect

. I have access to financing (excellent credit, good debt-to-income, and ample liquidity in IRA's)

. I do NOT have much cash for a 20%-25% down payment (due to a significant renovation of our primary residence for ourselves)

THE BOTTOM LINE:

. To acquire more SFR rentals, I seek cash.

THE PITCH:

I am doing an architectural side project for a local developer. In lieu of direct payment for my service (roughly 15 hours of work, $1,000 fee), I asked for a private loan to use for a downpayment on a SFR in order to buy, rehab and rent/hold.

He agreed to loan me up to $12K for up to 1 year with a return, lump sum payment of $13K.

Do you think this is a good deal?

For two additional sources of cash, 1) I seek to ask for the same $12K loan from another developer I know personally in exchange for architectural service and 2) I am considering taking $5,500 from my Roth IRA.

The strategy is that after the purchase, rehab and refinance, I pay back the two $12K loans with $26K and open a Roth for my wife for the $5,500 maximum contribution and have a new rental with positive cashflow.

The only missing piece is finding the property at the right price for the numbers to work.

I greatly appreciate your thoughts. 

Sincerely,

Paul

[Joe Villeneuve]

Great idea. I'm an Architect too, and I barter for services all the time. The Architectural services work very nicely within the area of REI. One of the things I do for bartering is a rendering service for other REI that, as I describe as common, can't visualize their hands with their eyes closed. Do renderings (digital, so I can do it very fast) of properties showing what they would look like with a different color scheme, or a bungalow as a Cape, or a ranch with a 2nd floor, etc.... The best part, is you don't have to actually see the property in person to do them, so the properties can be located anywhere...and don't have to be local.

I fell into this accidentally.  A RE Agent/Investor friend of mine had a client of his that couldn't sell a property.  He tried everything, including telling buyers they could turn his bungalow into a Cape.  Buyers showed up, couldn't visualize it, and left.  That's where I came in.  He tool the renderings, and sold it within a few days to one of the many offers he now had from some of the buyers that showed up looking for a Cape.

Yep, bartering is a great thing when you are a service based business/profession.