All Forum Posts by: Paul Nichols

@John Britt good stuff, John.

Being that it’s a long-term hold and we potentially may never cash-out, what would seem to be a fair split of equity AND cash flow?

@Saravanan Saravanan

Right. So a percentage of the monthly rental income would be set aside to cover maintenance and vacancy.

There is no predetermined payoff timeline. It is a long term hold.

If the market corrects, and it will (though rentals in my area are starting at a relatively low base), we hold.

So, given that we could theoretically hold endlessly, and thus never cash out, another angle is to ask how to split both cash flow and equity...

@Kenneth Garrett thanks! Helpful to have a gauge

@Saravanan Saravanan

Thanks! Private Lender would be lending 70% of the value of the property. The initial purchase would be approximately 10-20% of their savings.

I have a private lender who wants to lend/partner on long term buy and hold rentals.

If the private lender provides all the cash, and I do everything else (locate deal, evaluate, negotiate, oversee renovations, rent & manage), what is a fair equity split arrangement?

Scenario: private lender finances entire purchase and renovation for a buy and hold rental. RE Investor sources the investment (property), negotiates & facilitates deal, facilitates reno, and manages property thereafter.

If the RE Investor receives 100% of the rental income, what equity split is most appropriate/fair?

@Pierre-Sebastien Beauboeuf

Great question! As a Realtor myself, I’d suggest interviewing a handful (+/- 3) of agents over this next year in your target area. Think of critical questions you can ask them to ascertain who will be your best choice. Remember, they work for you and you hire them.

Some things to look for:

*hunger- they’ve got to want your business and fight to keep you satisfied

*understand and have experience with investing (particularly whatever investing approach you’re pursuing), not just working for homeowners

Get put on a drip campaign from their MLS with deals that match your search criteria. Later on, when you're ready to take action, you can then start asking for their off market stuff, etc.

Sew, how’s the litigation going?

@Daniel Pitner

Great question, Daniel. I’ve had similar experience and today happily work about 30 hrs/week in RE and 20-30 in another industry.

My advice would be to first count the cost. Namely, 1) you typically won't make income for at least 3 months after grinding hard, and 2) start-up expenses: education & licensing, MLS fees, brokerage desk fees, board dues, yard signage, cards and whatever costs you incur to market yourself. (For me these tallied up to about $2000 for the first 3 months).

That said, based on 1) you do and love sales, 2) you currently have a highly flexible base job, and 3) you’re already pursuing real estate related activity, I’d say it makes loads of sense to me. The RE sales and investing can work in tandem and benefit each other.

I’d highly recommend my brokerage for your situation. Unparalleled training and leading in much of the industry. Plus a really cool culture. If interested, DM me and I can arrange for you to talk to the right folks in the Peoria area.

@Jamiel Strickland Hey, Jameel! Congrats on house-hacking Dearborn! I’m a realtor in Detroit. Message me if you want pursue a 2nd property.