All Forum Posts by: Cole Johnson

Hey Everyone,

I own a few small apartment building of my own and have wanted to start a property management company for awhile now. Im also a Realtor and the company I work for owners approached me with starting a business with me. They have quite a large portfolio in commercial property and idea of building residential property. Just with managing their properties the company would be able to sustain. 

My question is how should I go forward on the may the company's equity is split. My initial thought would be to have an equal 33.3% split between myself and the two owners, and get a salary on top of this. Again this is in the very beginning of happening and just looking for previous experiences from you!

Keep in my mind I myself would be able to bring in close to 300K in rents a year, and they would be very passive in the company. I would be doing all the work.

Thanks in advance

Hey Everyone!

Im a 25 year old that has recently jumped into real estate while working a full time job. I currently own a four-plex and have pretty good knowledge on real estate.

I am from a small town in the midwest of 650 people. I no longer live here but know alot of people from here and there is a Non profit that owns 7 duplexes that are all 1bed/1 bath. My uncle and I have talked to the president of the non-profit and they are interested in selling it, and would take what is currently left on the mortgage for the sale since they would disband the non-profit. (Roughly 60-70k)

My Questions are:

1. Is this legal? ex. they are obviously selling it at way below the value of the property, can we benefit from this?

2. If i did this I would buy it with cash and then refinance for the actual price at 75/25 loan and invest in more property. Smart??

3. Anything I should be worried about? (These are 100% occupied and could cash flow at 50% ocuupancy)

Thanks in advance

@Todd Dexheimer Ya we will not be taking profits on top. Ive researched alot and found other structures alot better 2% aquistion, 1% managing, 70/30 profit split.

This is just what he brought to me and thought it was funny. Especially if they arent going to do anything after closing. ITs not like I wouldnt be able to do the due diligence period myself either. Im going to be getting most of the investors as well. 

Hey BP,

So I have recently purchased a 4-plex and its going great. Now im on to a 46 unit apartment building. I am partnering with a bigger broker in town that is into real estate. We are going to be offering on this building and are going to be raising money to fund the down payment. This is looking like a great deal, being conservative the cap rate is 10% and ROI is 13%. I just got done sitting down with him and here are my concearns.

There is a 15% deal structuring fee. This will be split 3 ways equally.

1.ME

2. Him

3. His brother

This seems like a high deal acquisition fee to me. The way we get it is him and his brother will do everything up to closing. After closing they are out and I manage the building. I will also get a 5% managing fee on the net income, which i can defer to a management company at any time.

All of us are going to be puting money into the deal as well and are going to have to raise around 275k from investors.

Should I ask for more anywhere else? They dont have any other rental properties but their family owns ALOT.

What do you think is this deal fair to me?

Hey Mike Albani it's so hard to judge if a deal is good or not on this little information. Put a little more into it. Good neighborhood? Are the expenses high? How do rents compare to others around you? Etc... Good luck

@Account Closed Thats close to 100,000 per door, the rents would have to be pretty high for that to be a good deal. Also when looking for a deal look for something that you can add value to. If you find an apartment with 22 doors and is currently cashflowing with the potential of raising rents by $150 per door in the next couple years. Those are the deals investors want to be in and banks want to loan for. Not apartments at the top of the rent rates.

Just something to think about.

@Britt Hennings I find saving money so easy for me. I just dont buy anything I dont need. Sure I like to spend money but I cant remember the last time I went shopping and spent more that $100. When I do need something I usually check craigslist and pawn shops first, then Amazon. I meal prep almost every meal besides breakfast. Cook 5 pounds of chicken, rice and a veggie and pack them. That lasts me a week and costs me $25. You just need to find a way to cut things you dont need. 

My grandpa told me young to not have monthly payments on anything unless its making you money and thats exactly what I have done. (I do have a gym membership and spotify as a monthy payment haha)

@Michael Doherty I went with the 5% because when I saw the interest rate at the time the conventional was lower. Also I looked at the PMI and the "red tape" with the FHA. Everyone was saying there are a lot more contingencies on a FHA, which I probably wouldn't of had a problem with, but was another reason I did the conventional.

Im not sure what point PMI drops off for an FHA. But if @Jeshua Patrick is right, why not refinance when you get to the 78%?

Gregory Allen Carter yes it is contingent on me having this as my primary resident. I have asked my banker if there is a certain amount of time I need to live in it. She said no. Then I asked how long until I can do it again she said there is no time period. I am very skeptical that this is actually true but I mine as well keep doing it until I cant!

@Doug Woodville Sure I can give you some numbers

Purchase Price 243,000

Seller Concessions 3% up to $7290 I might have to cover a minimal amount of closing costs

Appraised for 254,000

Down Payment 5% 12,100

Interest is 3.875% on a 30 year fixed

Rent average is 725 per unit totaling 3000 if full and about 100 in laundry a month

P&I,Insurance,Taxes close to 1550 a month

I pay water and garbage water was 1500 last year

Defiantly not a home run but very happy with what I got in my area. 1% rule is tough here