All Forum Posts by: Corey Davis

@Matt Hammack @Eric Blanchard @Account Closed

So it's starting to look more like Lake Oswego than anything else. Let's get a day/time pinned down? Can we start spreading the word? I'd like to see a decent turnout. Portland's rehab season is heating up, and we can use some connectivity.

@Account Closed

Seems like we have a list going. Aside from the Starbucks at the airport, does anyone else have any recommendations?

I'm down too. I spend most of my time in the Pearl and Alberta arts districts. I bet @Benjamin Ficker is probably game too.

@Cameron Ellis What kind of entity did you guys go with?

@Eric M. Hi Eric, I'm actually looking for partners on my projects in Portland OR right now, and have an ad going in the marketplace forum advertising for someone to cover the rehab portion of my flips, meaning I'm investing 200-300k, and that person is investing 30-70k. So, it's a little different than asking someone to fund my flips, and still leaves me as the majority funder (by a long shot) of the projects.

I'm very comfortable with my HML, as we have a relationship at this point that streamlines my funding process, and until I can come up with a lender who will close in 10-12 days on any property I find with a 65% ARV, at less than 14%, I am probably just going to stick with this lender.

The reason for finding a JV to fund the rehab, is I'm building a cash reserve to speed up my acquisitions process, as well as fund my commercial projects, and would benefit paying a little extra for someone else to use their cash on my projects.

Obviously with me contributing 80% or more on a project, as well as doing all of the footwork, it wouldn't be fair to split my profit with a contributor 50-70%.

I'm posting this for advice because there are multiple BP members who are currently discussing the different possibilities with me, and it's been discussed that we hear out different perspectives before sitting down with an attorney, in order to have an idea of what has worked with other people.

@Cameron Ellis So, how much of a percentage monetarily is your contribution? And when you say legwork, are you referring to the oversight of the rehab?

Does your cooperation contract place you both is a business relationship? In other words, are you both partners in an entity?

I posted this in the "Pro" section, but that crowd doesn't seem to be super active right now, re-posting here to see if anyone has any ideas.

I'm considering a JV partner on some upcoming projects, and have not partnered with anyone outside of my circle of contacts before, so some advice on how to go about this would be great!

Normally I fund a flip one of two ways:

Purchase the property using a HML, and rehab using my own funds,

OR,

Purchase the property and borrow the rehab funds all in one loan from my HM lender.

Obviously using my own funds on the rehab is ideal, saving me 20% on the rehab, but I find myself lately with more than one project going and can afford to use loaned money, reserving my own cash for the inevitable emergency, or in the case these days, for another opportunity.

When I fund the project 100% on a HM loan, I'm usually under 65% ARV for the total loan, and at 15-20% financing. My average deals now are 200-300k purchase and rehab total. So far the average rehab amount is 30-70k.

I have an ad going in the marketplace, and have made some great contacts, (thanks bigger pockets!) and now I would like to know how experienced professionals structure a deal like mine.

I will use my actual numbers on my current project for an example.

Property was purchased at 240. Estimated rehab is 60. ARV is 450. I have six months under contract with my lender to complete the flip. (More than I need, but if I hold the property until September/October, my agent is estimating an increase in interest and a potential for bids in the 475-500 range.). I know that's an interesting topic in itself, I will start another forum post for that shortly.

My situation is this: if I foot the bill on the 60k rehab, I tie up funds I could really use to start another project I have coming up. But, if I include it in my HM loan, it adds another 12k onto my losses, and I have to deal with the invoice clearance and inspection procedure to get my rehab funds.

If I partner with someone who puts in the rehab funds up front, I can actually save myself some money by utilizing a crew that I normally couldn't afford using the HML system, increasing my chance of making this flip work the way I want, and allowing me to utilize my own funds as a safety net and/or start another flip.

Kind of a great deal, huh?

Sooo....

How do I structure it so my rehab partner and I get a fair deal? What kind of contracts have people used? What's the best legal structure to use? I currently operate under an LLC, would I include this partner as a member of my LLC? Or do we start a new one? I already purchased the properties, should my JVP put a lien on my properties for his protection? Is there a legal issue of some kind with paying a percentage of my profit as his ROI? Or paying him a percentage on his investment?

All advice, as always, is very much welcome and appreciated!

By the way @Account Closed @Benjamin Ficker , I'm in Portland working on a commercial project and two flips at the moment. Networking never hurts...

@Account Closed Correct. The home owner rides the system. The bank loses money. The bank has to sell at a reduced rate to stop the pitfall. Ashley buys the property at a reduced rate, hires a few people to help rehab the property, everyone gets paid. Hence the inner workings of the system. Who is actually "losing" in this case? The bank? Perhaps, but then, aren't we all making up for it in financing fees? Yep. Are we getting screwed? Not if we buy REO's at reduced rates and make a good living rehabbing and selling those same properties.

Anyway, my point is this: to facilitate the effectiveness of the other parties in the process, facilitate effectiveness. Don't wait around for all involved to have the answer, you be the answer.

@Account Closed And if they had "done the right thing", we wouldn't be discussing the potential income Ashley is about to make. People drop the ball, other people pick it up. It's how the game is played. Imagine basketball without anyone making mistakes, and the other team capitalizing on those mistakes. Kinda pointless huh? If the winning team always looked down on, or blamed the other team, where would all the joy go in playing basketball?