All Forum Posts by: Arpan Patel

You can but I don't think that is a good idea. Many (in my sole opinion) bad idea about this deal. First, partnering with a contractor. I don't know if this has ever worked out for anyone... Second doing a flip for your first project - I think that is an unnecessary risk for your first project. There are many factors but I recommend getting a rental all ready to go for your first project so you can make money day one. Last, is Hard Money because that can wipe your profits out quick and most likely your first flip will take twice as long and for twice as much. All of those factors scream to me that you should not do this deal, structure, financing, or strategy starting out. As far as your question is concerned, yes it is possible to do that but I don't that is a good idea because if you mess up the rehab, you might be out of a home as well. The worst case scenario here is truly awful. The key is to manage downside risk.

We look at cash on cash and ROI but not IRR or anything that has to do with appreciation that is market driven and not forced because we don't control the market but we do control the asset. The BP calcs are good about these projections so I would start there and if you want to tweak it then make your own based on those principles.

For sure get your money out first before any splits. If they are not operating and you are both on the hook and they are just their for credit, no cash, no operations then yea you should probably get a higher split. I'd say 1/3 for your partner because they are only contributing their signature so their return on capital is infinite because they have no cash tied up.

You are going to have to show some income and I don't really know of a way around that. Have you just been living on savings the past two years? Is there someone you can partner with who could qualify for loans for you? Partnering can be an awesome thing if structured correctly 

Deal first. Then you actually have something to talk about to lenders. Everyone can say they are interested in funding you but with a deal, you hold their feet to the fire. If you don't raise the money in time you can still exit the deal and get another one (if you used a realtor, they will probably be pissed though)

That isn't how we do it. Both parties own half of a single company and that company is the entity that purchases real estate. So one side brings the money and the other side is the operator but they both own half of a company that owns the asset directly. Neither party themselves owns the house outright. They merely have a 50% stake each of a company who owns the asset. Does that make sense?

Agreed with much of what @Paolo Ruggieri has said but maybe not so much on the percentages - but for sure could be true for what he does. To make it easy, try throwing it into the BP calc and see what comes up. I think you are missing some numbers such as taxes and insurance that Paolo has said. Also, I don't see capex or maintenace in there. Lastly, I don't see closing costs for the purchase side. Try the calc and share with me if you'd like for me to take a look. It will make sure you aren't forgetting anything.

Yes to the first question. How we structure our deals is a company - say abc investing - is owned by two parties, our company and the investor (or their company if they choose) and abc investing is the one buying properties and taking out loans. There are many ways to structure the deal but we feel this is the fairest in our estimation.

We look at 60% of ARV minus all costs (repairs and misc) which we breakdown by item. Just roughly it comes out to that formula. Does that make sense? We have out own underwriting that we put properties through to see what the cashflow should look like and others results.

Partnering with people is a strategy and investing in places where you have boots on the ground like where you cousins live or good friends so they can keep an eye on it for you. Things like that because you will need boots on the ground but not necessarily your own. Does that make sense? We partner with people out of state so we are those people they rely on to get things done and manage the asset.