All Forum Posts by: David Fritch

Joel, 

Sorry I didn't see when you replied because I didn't follow the post. Any strategies developing for you? There are as many ways to partner as there are deals to do.  I really believe that if done correctly both sides will feel like they got a really great deal. That's what you should aim to achieve. 

As a buy & hold I would try to work out a percentage around 50% or if it's significantly less equity, I'd want a management fee that is at market rate for your area. That way you are compensated fairly for that role.  If/when you don't want to manage the rental anymore it is already budgeted for. 

The reason why I asked what you were doing with the investors money and what their needs for repayment are is that it's important to understand what makes the deal attractive for your investor. You have to make it good for them but not so good it de-incentiveizes you. For example, let's say that you own 10 rentals, 8 of your own and 2 you own 15% of. Now which one is going to get your best efforts and which one will be a nuisance? That's why it's important that you don't give too much of the deal away. It's fair to everyone that you keep things as fair as possible. 

When a person lends me money, I give them 1% interest per month for no less than 6 months even if I sell early. I give them the first position on a loan to value ratio of 50%. I already know where the income for the payment is coming. I talk to them about all the scenarios including the worst case scenarios. I  guess I treat those debts as serious or more serious than a bank loan.I feel like I am the more experienced person and I should treat them like I'd like to be treated. 

I make alot of money using their money and they get good passive income. It's a win/win with a good balance of  risk/reward.

In Washington they would need to go to the department of licensing and fill out a affidavit for lost title which would function as a temporary title until the replacement comes. This may vary from state to state. 

My question is why the park is selling the home. Why would the sell an income producing asset in such a quick cheap fashion? 

You should also be aware that some, but not all, mobile home parks require that the trailers be owner occupied. They don't allow rentals. 

I would take the tax hit and use the cash  for the next great deal. Liquid capital has great power. Imho people worry too much about tax benefits and saving money on interest and end up in a situation, whether an opportunity or problem,  where they need cash. 

I have had the same questions on property in the Yakima reservation. Following this thread. 

In the lending scenario, are they getting a trust deed and promissory note as security or just a promissory note? ie is that the money you're using to buy the house with or are you using it as a down payment + rehab + carrying costs?  

So I guess what I'm asking is; walk through a hypothetical deal, roughly how much money are you getting from how many parties and what are you using the money for?  Then 2-3 options on how and when the investors money might be paid back. I think your answer is in those two questions. 1 What is your investors risk/security? 2 When and how would they like to be paid and does that mesh with how you'd like to be paid? If you answer those you have a pretty good starting point for structuring the deal. 

I like your plan but I don't have any knowledge to contribute. Keep us posted. 

What does the seller want? If they want to cash out ASAP and you can't find a bank to work with you, find a money partner to do a joint venture (especially if they have experience/skills you need) or a private lender to do hard money. Most lenders will want a down-payment but some will not if the deal is right and they're ok with asset based lending. Once the house is in your name refinance it and pay off your partner/lender.

Now if the seller is not in a hurry, you have a range of options. Lease with an option is a pretty basic one. That buys you some time. 

Either way unless you don't  find a bank to work with no money down you have to break into two steps one way or another. Step one gets you control and step two is your buy and hold low interest loan. Sure you'll have to pay for a few financing fees two times but that's just the the cost of doing business with the kind of equity your getting.  PM me if you need contacts for a couple assett based lenders. 

Also,  Brandon Turner's book on investing with low and no money down is fantastic. You can get a digital copy and do a quick study for ideas. 

You really are in a great position, probably the best thing you have going for you is that you have a great mindset for your age. 

You need to figure out what your long term strategy is and work in that direction. Do you want to be a landlord. Do you want to be a developer? Something else? 

Having said that, I know what I would do based on your info provided. If you build a new house with your dad you'll have 3 advantages; you can build it to your exact specifications, you'll have minimal maintenance issues and, most importantly, you'll equity right out of the gate. Even in a college town there are more tenants than 18 year old party animals, University employees, grad students, married students and folks who's jobs have nothing to do with the college. They type of folks who would prefer to have a nicer place in a quieter neighborhood.  I would try to get more info on the market for rentals further away from campus. 

If you're ok with having roommates, you could even house hack, live there and rent out 2 or 3 rooms for a while, letting others pay your mortgage while putting your money towards your next investment. 

I found land flipping after doing a flip house about 18 months ago. Someone local suggested that I listen to BP podcast episode 39 with Seth Williams. I was hooked and connected with Seth right away and have been flipping land ever since. 

It's a niche that I'm pretty committed to. The underlying 2 strengths of the business; 

1) you can get some stupid good deals, things you'd pretty much never find in housing

2)  land is generally really poorly marketed so you can find buyers if you actually develop the skills/tools and put in the effort.

My strategy is straight flip and I'm focused on local; think arbitrage rather than developing. It's really hard to avoid the temptation to develop though. It has been a good side gig and I'm working to make it full time. 

It's a different animal than houses for sure. Seth's site is REtipster.com and he offers a course now (highly suggested). There's another guy who teaches about land flipping, his brand is The Land Geek, that sounds like what you're talking about with the virtual flipping. Jack Bosch has some older stuff on it but theses guys have built on his foundation so I wouldn't waste your time. Check those out if you want learn more. Message me with any questions. 

Thank you Caroline! I had almost forgotten about this post. I may have to take you up on your offer. This is a very interesting subject/opportunity to me!