All Forum Posts by: Benjamin Aaker

A big part of the investor's mindset is the liquidity of the cash they are putting at risk (investing). Investing in a syndication means that money will be difficult to pull out for as long as the deal is running in the initial term. That's a big reason for the ~5 year mark to have investors exit the deal, either by sale or refinance. There will need to be a way for investors to exit at some point, and most syndicators will bake this in to the initial terms. Determine how long you want to hold your investment prior to beginning your search.

Take a look at Box Brownie. While I haven't personally used them, I've heard some great reviews. https://www.boxbrownie.com/

Look at it in terms of risk: 50% isn't a lot to give your partner for financing 100% of the deal. He/She's putting all that money at risk while you have none. Further, your asking the partner to trust you to manage the property well enough to make money. Every investor has different risk tolerance and goals, but it would take significantly more of the deal for me to invest.

It depends on your partners and the upside. They are going to be the silent investors but in a partnership they are going to be taking on both financial and civil liability. Managing the deal is a lot of work, but you aren't risking any of your money. You could simply walk away, but they can't. In a partnership, all partners are responsible for the business. If there is a civil liability case that doesn't go your way, all three of you will be responsible. Those liabilities are a lot to take on for putting in 50% of the equity but only getting 1/4 of the profit. As far as upside, if the numbers are very promising, that might entice an investor to get involved on these terms. 

It'll depend on what is in your lease agreement. Generally, leases are agnostic to whom the property manager is because managers can change from time to time and you don't want to be in violation of the lease. For those leases already in-force, you should notify the tenants in writing of the management change. Make sure you read over the lease well (perhaps you already have) before going forward.

Since you are living in your first rental property, you should be able to take out a home equity line of credit (HELOC) on the property. The HELOC sits ready until you find your next property. You'll essentially take equity out of the first house to buy the second one. Keep in mind that the interest rate is usually variable but has a maximum rate of rise. This needs to be factored into your calculations and the amount you take out needs to still allow house #1 to cash flow.

I prefer equity to cash flow. It needs to not lose money, but then I want to build equity as fast as I can. The Midwest is a great place to be investing and doesn't suffer as much from the ups and downs of the market. This area of the country has been appreciating quite well, too. Seems like you have a good plan.

Seems like you've got a good plan to get this deal done. Good luck and let us know how it goes.

The appraisal is a contrivance that your bank uses to help it make a decision on whether to offer you a loan or not. It is only one opinion of the value of the property. You need to make sure you have your figures right about the ARV (the after repair value) of 370k. If you do your homework correctly, then you'll have that difference (30k) in instant equity plus the equity you put in as a down payment. The appraisal shouldn't have anything to do with your valuation of the deal. It doesn't matter and you should be commended on coming to an agreement on a sale price that the appraiser approved.

First determine what are your long-term goals. Maybe you want to keep doing the same project management for a log time or hang a shingle on a firm of your own. If you are looking to transition into real estate, are you looking for long term holds and sitting on the beach, or something more involved, like principalling deals, flipping, or wholesaling? Once you have that figured out, work backward to figure out what you should do today. Try to find someone working in your preferred area and work with them. Networking is huge here. Start going to meetups right now.