All Forum Posts by: Matt Lawrence

Hopefully this is in the right forum but there is really no clear cut topic for the situation me & my business partner are in.

In April of 2012 me & my best friend, who is also an RE agent, started our own buy & hold business with plans to do so to build a portfolio to live on when we retire. We are both 30 years old now. We just closed on our 6th single family & moving at a good pace.

The problem is that 5 of those homes are in my best friends name, the other in mine thanks to my Mom cosigning, because I couldn't get pre approval until this year (hopefully) which increases his liability/risk. We are in this 50/50 but I know its not fair for him to be at greater risk while having 2 kids & married while me being single with no kids. I am told I will be pre approved because of the difference of money I made in 2013 compared to my 2012 income (Im self-employed).

We started an LLC S-Corp & have not yet transferred homes there for fear of having to pay off the remaining equity sooner than our 30-year plan; I've heard in 3 years its possible?- which could wipe us out if having to pay $70k on just 1 home. We plan to at some point this year after meeting with our Tax Advisor but not sure of the best approach.

This leads to my partner not only worried about what could happen, and understandably so, but also where his finances will be in 5-10 years. What if he wants to send his kids to a private school & needs $15k to do so? He wants to be in a position to have the option to sell a house to cover family costs like that while not having to have me approve it because we are in a different stage in our lives. I myself do not plan to sell homes for a longer period of time, but I know that things change as we can't predict the near future so I'm trying to be open to things of that nature.

Having explained this - sorry its long - are there any recommendations for either side of this? We are considering (in no particular order) 1)title transfers to even things out, 2) sell my share of ownership of our company where he would outright own the 5 homes that are in his name & I do the same for the home in my name, 3)put 3 homes in the LLC and put the next home in my name, making it owning 2 homes each, with 3 in our company to even things out.

It should be noted that I trust my life with this guy, he's my best friend & we both want whats best for each other & will be meeting with our attorney, who has a real estate background, this coming Wednesday.

What would you do in my shoes? In his shoes? We want to do what's best for the long-term and want to do this sooner than later. We want to continue working together if possible. Any advice would be greatly appreciated.

Thanks in advance,

Matt

Ok, if that's accurate, do you think that would vary from lender to lender &/or state to state? I'm still trying to get a better understanding of what are basic rules and which can vary depending on policies, location, etc.

Thanks J, I love detailed examples like that.

Jimmy or to others that might know; is it right that if I were to get a co-signer for my primary that I would still get as much credit for home ownership as I would if I was pre-approved as long as I didn't miss any payments? I was told this from the last bank I was talking to when making an offer on a home.

Perhaps more importantly, as I think I said earlier in this thread, I have a business with a good friend where we buy-and-hold and lease to tenants. The first 3 homes are in his name & after the fourth it will be my turn to step-up & put in my name. From the sound of it, it seems as though it will take approx 2 years before I'm pre-approved, if at all.

My question is could he be my co-signer for when we put the homes in my name for our business? Would that count against him in any way? We are in it 50/50 & plan to do this for many years yo come.

Yes Dawn, we're very lucky to be blessed with his generousity but don't expect deals like this from others that we don't know well. We just want to make sure we have everything aligned properly where neither side has regrets a year from now.

Hey Michael, yes we felt paying principal & interest made the most sense, between 5-9 years & thus far we have felt around 5.75% makes the most sense.

Our investor wants us to pay him less than we would to a bank to save us money & close to what he would make in investing elsewhere is how we came to that amount. The sooner we pay him back the better & right now are leaning towards a 7-8 year plan while leaving the option open to paying off sooner, giving him a monthly check until paid off.

???

Hey Jimmy, how can I become pre-approved for my primary if my main job is inconsistent income where I have reported $100k one year and 0 the next? I have 3x the value of the house in assets but the first lender didn't seem to care becuase of my tax returns.

I'm trying to avoid the need of a co-signer & don't want to make myself get a "behind the desk" job. Should I seek more lenders to see if this works elswhere? I can't think of another option.

Thanks for the help!
Matt

We came to an agreement 3 months ago to do business with eachother. We are confident in one another that we will find the right formula before closing in 5 weeks.

But yes Ben, for our future deals we would like a more organized plan, we just have no experience with this yet but would like that to change sooner than later :-)

I have a company I started with a friend in which we buy-and-hold SFR. After buying our first 2 properties with our own money, we are seeking to use OPM for our 3rd house that we just "bought" - pending inspection.

We have a private money loan set for our down payment + closing costs which should be roughly $25,000.

My question is what is the standard(best) way to payback our private investor? 5-7-10 year plan? We have known the investor a very long and trust/loyalty is of no concern; we all want what is best for both sides. I would appreciate any feedback/advice on how you would handle the matter.

Thanks,
Matt