All Forum Posts by: Harry Williams

@Joseph M. One of the responsibilities of my partnered developer is to find deals. I pass along prospective properties, too, but they have connections in the space to seek deals quickly.  

@Rob Drum Wanted to ask you a quick question — is it common for the split to be higher than 50/50 for the investor? 60/40 or 70/30?

With all the contracts, documents, invoices, and other paperwork, what is your filing system to stay organized from start to finish?

 I am funding a...flip. The house is 15 minutes away from my primary residence. I could be there every day if I desired to. Although, I would rather it be fairly passive. With that said, I am eager to learn, too. 

@Rob Drum Do you mean good incentives for him to perform?

@Joseph M. As I am the one taking the financial risk, I required the 20% guarantee. 

@Account Closed Thanks for your reply. I can (and will) be as involved as I would like. Or, I can be as passive as I'd like. I plan to also use this opportunity to learn but with the confidence of someone with a proven track record steering the ship. 

Thanks for your response. I'm curious — how is it different from other structures you have done or seen? 

 Yes, that is correct. There is a development agreement between the developer and I with the fine details. A real estate attorney put it together. I purchase and own the house, and reimburse rehab costs. Upon sale, we split profits 50/50 and I am guaranteed a 20% per annum return. 

For example: if my return was only $25,000 or 6.05% in the four-month holding period, that is only 18.16% per annum. Because the contract secures a guaranteed 20% per annum return for me, and I pay the developer after I am paid, then $5,551 would be deducted from their pay bringing me to $30,550 profit or 20% per annum return. 

 As mentioned, the $83,600 is TOTAL profit, meaning after commissions and closing costs. The timeframe of purchase to sale is 4 months which is a 10.64% return or 20% per annum return.