All Forum Posts by: Brandon Craig

City council meeting tonight to discuss AirBnB if you're interested.

I invest in Johnson County just south of DFW. There's some serious rehab properties you can pick up around $90-110k, but need $70k in rehab. Otherwise you can get rentable properties in the $180k and up pricepoints. I don't know where you'd find 1% rule houses if that's what you're hoping for.

Sherman and Denison are decent emerging markets for SFR rentals. South DFW suburbs are growing in the rental space (Waxahachie area). The Austin area is growing like crazy and rent is sky high. Best of luck!

Yo @Brandon Craig

At best you would be able to break even if you turned a 600k property into a LTR, but you would need to rent out each room invidiually to make it work. $700 per room for a luxury home is not too far fetched, which would put gross rents at $3500. Your PITI is probably around $3300 with 20% down, that leaves $200 for reserves. Assuming tenants would also be paying utilities. You will probably need to self manage as most property managers will not do RBTR.

The silver lining here is that the area you described near the Zoo has a ton of potential for appreciation. IMO, the path of progress is heading towards Bishop Arts/Oak Cliff/Cedar Crest area which is where your property is. It might be the hood now but what about in 10 years?

There's more than one way to skin a cat. Who's finding the deal? Negotiating? Working with the REALTOR? Working with Title? Coordinating inspections? Managing the property on a day-to-day basis?

I would start with a straight split based on money invested: you put in 25%, you get 25% back. If one partner is performing specific tasks, I would determine compensation for each task as it's performed. For example, if you handle all the property management services then you could be paid 10% of the monthly income. This ensures you are compensated for your effort without complicating the equity split upon sale. If you put the deal together and your partner just handed you some money, then maybe you can be compensated a "finder fee" for the effort involved in putting the deal together without complicating the equity split upon sale.

I disagree with David. If I put 75% of the cash in, I want 75% of the sales price. I may adjust that based on what the partner has done during the process, but I would not give away half my equity! Example:

Investor A: $25,000 (25%)

Investor B: $75,000 (75%)

Property is bought for $100,000 and sells ten years later for $150,000. If they split the equity 25/75:

Investor A gets $12,500 which equals 50% return

Investor B: gets $37,500 which equals 50% return

If the investors choose to split the equity 50/50:

Investor A: $25,000 which equals a 100% return

Investor B: $25,000 which equals a 33% return

The one giving the least is getting astronomical returns and the partner with the most skin in the game is getting 1/3 the return. How does that make sense?

It all depends on both of your goals. Whenever I partner, I try to push cash flows toward the heavier capital partner. So I would consider doing 75/25 on cash flows until both partners get their money back, and 50/50 on equity.

Putting in 75% (or even 100%) of the capital does not entitle one to the vast majority of equity.