All Forum Posts by: Robert Ombres

I appreciate your response. It does point out things to consider.

The buy is for a house I intend to buy and hold. It will be used as a vacation rental. I used the BP calculator and found it to cash flow with the traditional long term lease so I believe it to be a safe fallback in case nightly rentals don't work out for it. The property is outside Asheville, NC. If you know Asheville market, you know the area is (has been) seeing quick sales, rising prices, and rising rental rates. The area is flood with tourists throughout the year. It's not Orlando, but we see a lot of tourist visitors.

I have less experience with vacation rentals than I do with traditional rentals and that experience is from renting. My partner however has been doing vacation rentals in this area for several years and traditional long term rentals longer. I feel comfortable partnering and sharing some profits with someone who has the knowledge and experience I lack. I even feel it a safer deal because of it.

I could buy the property and pay a manager. I've read that management companies for nightly rentals charge around 30%, is that right? If so, that doesn't sound like a good deal to me. Someone not vested in the property isn't going to work as hard as someone who is. They aren't going to treat it like it's theirs. My partner will, because it sort of is.

I don't mind people being critical- It provides things to consider. That's why I posted- more eyes and experienced investors to share their opinions. However, I don't want to get a bunch of posts in the tune of "Don't do it, that's scary/risky/not as profitable as/etc" As a beginner, I do need to be cautious and take advice. But, also as a beginner, I need to make deals. As long as they're not bad deals from the start- they don't have to be great deals where I'm the only person profiting. So please continue posting critical points for me to consider. But if you don't even answer the question posted, you're not contributing at all other than being negative solely because it's something you wouldn't do.

People partner on deals all the time. I imagine that a lot of times, one person holds more risk than the other(s). I am asking how to protect myself, my partner, and the property through a legal entity. So... how would YOU do it?

So I believe I know the answer, and I am going back to a few books to read more on each to make sure my situation fits.. but this will be my first partnership and I realize I lack the experience and maybe knowledge to make this decision.

Background:

I am working on making my first investment purchase! I found an interested partner through networking with friends- basically putting the idea out into the world that I wanted to buy real estate investments and was looking for a partner. A friend directed me to one of his friends... and bam. I've been up for hours chatting through ideas and different properties in the market we are looking at.

Our agreement:

I will take out a loan at a local branch bank. 100% financing, 0 down. 4% APR. 30 years. My partner and I will split expenses, profits, liabilities. He will be managing the property.

To protect each other from and the property I believe we need to form a legal entity instead of a partnership. I think a member managed LLC is ideal as it will allow us to share decision making responsibilities. Transferring the property to LLC will also transfer the taxes.

This is my understanding from what I have read. If I am wrong or should consider anything differently, please advise.

Thanks!

@Kyle Pare I use USAA for my banking, insurance, and car buying services. I've had nothing but positive experiences with them for all those uses. However, when it came to lending for a house, I wasn't entirely impressed. I wanted to be loyal as I've always gotten great service from them, but you have to consider the product and how painless for you it is.
I encourage you to seek out and compare different lenders. You might find that some others are better when it comes to this. Send me a PM and I will connect you with who I used. Again, closing in 26 days. You will be laughed at from most lenders when you ask them to make it happen in under 30 days. I know how quickly things (sometimes) must happen when you come under orders.
Either way, best of luck and welcome to BP!

@Ryan M. How are things progressing for you? I hope you haven't given up. How is CREIA? I live in Fletcher and would love to start meeting some others as well.

@Steve Kehoe Welcome! The triangle seems like a great place to be. I lived in Cary for a while myself. Other than the downtown area building up, where do you anticipate the next direction of growth? I moved away several years ago and should visit again soon. I'm looking at several properties in SE Raleigh area and Garner.

@Blake Jarrett Sounds like you have plenty of knowledge and experience to share as well! Welcome!

@Kyle Pare Welcome! What branch? I was Army. Your VA loan eligibility will allow you to purchase primary residency homes (lower down payment and interest rates) that you can later use as rentals. Have you found a lender that you're happy with yet? Message me and I can get you in touch with an Air Force EOD Veteran who is now a Mortgage Banker. He (and his bank) are getting me to closing 26 days from start of contract. I don't believe there are many banks out there getting people into their new homes so quickly. He specializes in VA loans, but can do others as well.

Kaplan has a prep course and I believe they guarantee success.

I was under the impression that in NC the 75 hours of instruction must be "in class" classes and could not be taken online. Does anyone know if I am mistaken?

@Chris Harjes @Shirley Gregory Thanks! I will look them up!