All Forum Posts by: Alex M.

Congrats. Nice deal and well-handled. I'm looking forward to my first multi also, but keep having to walk on deals due to surprise rehab needs - old housing stock in Philadelphia and limited multis on the market.

@Kevin Bellavance - thanks for the feedback - especially on the waterfall structure, as I was not looking forward to digging into that. I'm looking at this as one of at least 6 with this particular individual, so it sounds like looking into an LLC may make sense.

The one thing though is that I am looking for buy and hold here and not flips.  @James Palin It is not clear if you are doing this as a flip or long-term hold. If this is a flip and my questions are off topic - please state so so as I don't want to hijack your post!

 Hi Craig - I'm looking into a similar partnership right now, where I am the locate, rehab, manage guy. Can you provide any additional details as to what worked well for you and what did not. I'm very interested in understanding the split around repairs and CapX over the lifetime of the investment. Right now, I would be interested in coming to agreement with my finance partner on a set aside (10% repairs, 10% CapX, 10% property mgmt - I do it, 10% vacancy) that we set aside in an account and then share the repairs and other costs moving forward. Whatever is left is split 50/50. When we cash out of the property - around 5-10 years, the profit is 50/50. Is this similar to how you are doing it?

I'm currently in a similar situation with a colleague from my day job wanting to partner with me on a few deals - he previously financed my first rental property, but now wants to get "more of the pie". I like the concept that X% of a $X is better than 0% of a million dollars, but I also would like to make sure the deal makes sense for both of us - managing risk and reward.

Seeing as this is an old post, I'm just curious where you landed with this and if you have an recommendations based on your experience - for me, this is 50/50 or X%/X% for a rental and not a flip.

Hey James - thanks for posting this. I'm looking for similar answers, as I have a money partner right now, but have been asked to "suggest a split". I'm trying to understand what is commonly done, how to manage/reduce risk on both sides, what is the best way to "own" the property - i.e. under my name, under an LLC that we both own, etc.

Hope you generate some responses on here.

I've seen some references to "waterfall" structures on the forum and am starting to try to dig into this to see if it makes sense, but don't have any good direction yet.

This is a great example of why expenses need to be accounted for when you purchase the house. Thanks for the illustration. 

I'm assuming from the way you lay this story out that this was not actually much of a pain for you, as it sounds like you budget for Cap Ex and Repairs as needed, so it just came out of a line item that you had already planned for - even if you did not know exactly what particular expense it was going to be.

I'm just getting started in this investing game, but looking at around 10% for Cap ex, 10% for repairs, 10% for vacancy, and 10% for management (even though I self manage so pay myself right now) and then hoping for $100+ per month in income. If a property can do this, it meets my minimum.

I would say that without Bigger Pockets, I would never, ever, have guessed expenses would have been so high as this, but am now taking this as gospel when looking at what to invest in. Hopefully everyone else on this site approaches investing using similar math.

Welcome to BP, Gloriana! you are close to my home country. I'm from Wales originally, and still have family in Wales and England (London and Oxford) that I am hoping to get into REI at some point. I'd be curious to know how many others are on here from outside the U.S.

Hope that this site is useful for you.

@Mark Shaffar - thanks for comment. I agree. That's my biggest concern. I've known this person for years and there is a lot of mutual respect as we have worked together in a non real estate function. I am hoping to find a way to balance/structure the partnership and expectations such that it produces a high probability of a good investment for both of us.

@Bruce Faulk - I guess it depends on where in NYC you are currently and where you are willing to be that still works for you and your family. I don't know the NYC market personally, other than to understand it is very expensive and likely difficult to find a property in Manhattan area that would work as a cash flowing investment. That said, I believe there are a number of BP folks that invest in and around NYC and have been able to find small multis. I'm sorry I cannot point you in the direction of these folks... hopefully someone with knowledge will comment here.

Also - the @ function for people's names is one of those things on BP that I wish was a little more intuitive, but just so u know - if you enter @ and the person's name a list of options will pop up at the bottom of the screen you are typing in. If you select that name from the list, it will hotlink it so it flags that person when you post.

Good luck!

@Ali Boone I just posted a question on the forum asking for guidance on the strategy you describe here:

http://www.biggerpockets.com/forums/49/topics/2056...

Would love some of your insight into how best to structure this kind of finance partnership - it sounds like it is also really relevant for @Bruce Faulk based on this topic. Is there anything more you can share regarding this strategy...

I am simultaneously looking at the FHA approach I recommended above for a multifamily purchase and also trying to structure this kind of partnership to move quickly on some SFRs.

Thanks!