All Forum Posts by: Jacob Phillips

@Jonathan R McLaughlin thank you, I didn’t take your comments critically, you were very helpful. I have found the magic number in the property in question which allow me to basically just borrow the down payment from him.

How would you set that up? If he’d go for it, I could still have the property and just pay him and the bank. It could basically be 100% financed

@Zachary

You bring up a solid point; learning the process for a “legit partnership” on someone easier would definitely be a valuable experience.

Honestly, he told me to go forward with it. I gave him two options: either loan for a BRRRR or partner for this duplex. I love in a small Midwest town so the margins are super small, but he's still earn a higher return with me than anywhere else he is right now (his admission).

The only stipulations he gave were that I had to use my aunt as my realtor (easy, already doing that), and that if he lent the money I needed to get the insurance policy. He actually didn’t care if I did that should we go 50/50 on the duplex.

I guess I’m just asking if there’s a decent way to structure everything without getting too legal, but if that’s a route I need to go then I will

@Stone Saathoff is there a clean way to do that without incurring attorney costs right now? I would never consider it with a non family member but if there was a way that I could cross Ts and dot Is and watch out for us both and just alleviate any headaches over who’s responsible for what

@Stone grandpa sure is a character ha! Ok so I didn’t consider “term” and that shows what I know.

My other question seems to not have been asked well so I’d like to redirect it at you, if that’s ok.

How would you structure a deal with your grandpa? I want something in writing, obviously, that spells out my duties and expectations and his duties and expectations. Mostly, he’s money, I handle the tenants and headaches and all that. I’d like to think we wouldn’t need legal consultation, maybe just a notarized agreement between the two of us.

If his name is on the mortgage with mine, that mortgage is going to outlive him. That could make things messy. What are your thoughts on the entire situation given what you know, and what more do you need for clarity?

@Zachary i honestly totally forgot about “term”. Haven’t exactly shopped around because I do not have a family yet. Thank you!

@Matt Ziegler i haven’t quoted it yet. I honestly didn’t forgot about “term” so that helps a lot. Shows what I know!

I have an opportunity to possibly purchase a duplex (my third and fourth units in as many months) here in my hometown, but I’ll need to partner with my grandfather in order to make it happen. He would provide the down payment, and I would manage it.

Grandpa can be pretty old timey and controlling, and really not always very pleasant to work with; especially if there’s money involved. But I showed him my first property, the numbers, my Cozy account, how I was screening tenants, my leases and applications, bank accounts (showing I was running it separately of my personal finances), and some bigger pockets calculator results.

He’s very excited to go in with me and has pretty much told me to find something and make it happen. His only request was that I take out a life insurance policy equal to my half, basically, or equal to what he loans me if we don’t actually partner, and make him the beneficiary.

I can respect that request, but as I’m 27, I was curious how you guys may structure something like that? Some other options? I’m open to any and all ideas, I just don’t love the idea of my cash flow basically getting swallowed up in insurance premiums, although I’ll admit that to this point I haven’t priced anything.

Thoughts??

@Mo Muigai

I just closed on my first rental with a 10% down 20 year note at 5.75%. It was through a regional bank and frankly I was shocked they'd even finance me. That phone call started as a "what would I meed to do" call and turned into a "holy cow I could do this now" call. Not to an LLC. I think intimately it comes down to the numbers. That's not to say don't shop around and find the best rate you can, but for us new people we could waste all our time and energy and get down on ourselves looking for the perfect rate, OR we could just make sure our deal works with the rate we get.

Good luck!

@John Teachout as Im just starting out, I’m anticipating very little access to bank funds. I will virtually no equity to tap into.

My premise for this question is kind of in the realm of “Ok, my first one is underway. I’m seriously addicted to this process. At what point am I safe to go after the next one?” So that’s where I’m asking you guys kind of what sort of rules you hold yourself to during your acquisition phase. Obviously, this question changes once I’m done acquiring, but I’m far from that point. What amount or percent of available funds do you deem yourself “safe” to pursue the next one. If I save up 6 months of expenses plus big ticket items and then drain it on a down payment for the next one, we’ll i just shot myself in the foot. I’m talking about an untouchable emergency fund.

@Lynnette E. This is probably closest to my original way of viewing it with a few twists. You gave me more to think about and some “ahhh duh,” so thank you for that :)