All Forum Posts by: Joe Villeneuve

@Chris S. The difference in returns has more to do with the market options you have than the amount of cash you put into the deals.  As far as return percentage, that too depends on the market you are investing in.

My preference is over 100%...which means I'm getting all of my money back plus profit.  I can do this because of the Entrance/Exit Strategy I use.  If I invest using a more traditional EES, like when I have partners, I look for at least a 25% CC return for them.  If I can't provide that, why would they come in as my partner?

Joe Villeneuve
REcapSystem
A2REIC

@Walt Payne I can also invest the cash flow from the houses that are refinanced.  The idea of CF isn't to reinvest, it's to pay bills in place of your income.  CF is CF.  They both have CF, but even if I did reinvest the CF from the houses I didn't refi it would take at least 5 years to get enough to buy and rehab...and if I'm reinvesting my CF, what am I using for my bills?

Joe Villeneuve
REcapSystem
A2REIC

@Walt Payne You do realize these are not assumptions, and are actual numbers coming from actual deals right?

Joe Villeneuve
REcapSystem
A2REIC

@Scott Pigman 

One of the problems of using articles, and other interpretation of facts is the "take aways" are usually screwed by the author or sources own interpretation.

Having said that, when in doubt, I ask someone that is actually doing what I'm thinking about doing.  All I can tell you is I'm doing this, and I'm not the only one.  On top of it, many outstate investors are doing it as well.

This is a gold mine for holding properties.

Joe Villeneuve
REcapSystem
A2REIC

@Kevin Starr 

The LLC can't get the loan, unless it was a business loan, so an individual would be the holder of the note. The % splits would depend on how many and what their involvement would be...and sweat equity (we call it the "heavy lifting") should not be undervalued. There is no deal without any of the participants. The fact is, you have the deal, and could find another finance solution easier than they could find someone with a deal.

How much you put into the deal has little bearing if you are the one organizing it.  It's your deal.  You dictate the terms.  Having said that, if your potential funding source doesn't agree to it, you actually have no deal.  Start by asking them what type of return they would wanton their investment, does it need to be all in cash, and over what time period.  Most important, find out how much cash they are bringing to the table.

Joe Villeneuve
REcapSystem
A2REIC

@Michael Sherwood 

This is a tough one.  Why does he want to cash out, is the first question.  Looking quickly at your numbers it appears as though he's cash flowing around 250-275/month?

What is he asking for the property?  How long has he had it...as in how long has he been cash flowing around $250+ a month?

I ask these questions because I see too many investors look at the total cost as purchase price and not the actual cost which is the accumulated monthly payments plus cash originally in.  With this in mind, he hasn't actually paid 115k for the property.  He's paid:

1 - What ever cash he originally put in plus...
2 - What ever losses he's incurred over the time of ownership (this would be "zero" if he's cash flowed the entire time, plus...
3 - What ever he still owes...in this case $38,500.

Since everything else is profit (cash flows), all he really has to do is sell it for more than the total of listed items 1 - 3 above, and he makes a profit....cash flows plus difference of what sells it for and what he paid (items 1 - 3) for it.

This is one of the unappreciated advantages of owning rentals instead of flipping.  All you need to do to make a profit when/if you sell is to sell it for more than you actually paid for it.  Remember, the tenants are the ones that are actually paying for it (as long as you're cash flowing), not the investor.

Joe Villeneuve
REcapSystem
A2REIC

@Arlin Potter  It's not that complicated, but I do agree that having them loan it is one of the ways we would approach a situation like this.  We do partnerships, or we set it up using financing, either way works, but not for every scenario...thus my original question to @Kevin Starr 

@Kevin Starr We do this all the time.  First, do you or your family members have good enough credit to get a loan on the property you would buy?  The answer to that question dictates my next question and answer.

Initially, just set up an LLC with all involved as members. Base the % splits to each partner/member on whatever they will all agree to. Now the caveat to that is you must start with a % for yourself that will satisfy your needs, but the answer to my initial question actually will help answer how you split the shares.

We do this all the time, like I said.  They have the cash, but not the knowledge and/or time to find, analyze, setup and manage the deal(s), so don't sell yourself short...but don't get greedy either.  If you have cash, and credit ability on your "team", you have a lot more power to do more than one deal.

Joe Villeneuve
REcapSystem
A2REIC

@Scott Pigman Being an ex resident, you are aware that the article speaks of Wayne county, and that Detroit may be part of Wayne county, the vast majority of Wayne county is not Detroit.  In fact, Wayne county borders up against Washtenaw county where you are familiar with *AA and Ypsi).  I don't invest in Detroit, but I do invest in the immediate suburbs and I can tell you that they are cash cows.  The perfect mix of low taxes, high rents, and low cost to buy.  You can't help but cash flow big.  How does an all in cost of less than $50k sound, with a return of $5k in cash flow per year including 100% (cost) financing and a property manager?

This area allows the investor top buy/rahb with cash, and refi all that cash back out, still cash flow (as stated in the previous paragraph), and then use those same funds again on the next deal...and keep repeating this until...?

Thanks to the news media, I find that too many people outside of this area seem to think Michigan is actually inside of Detroit.

This are is the investors dream.

Joe Villeneuve
REcapSystem
A2REIC

@Richard C. By saying you've never had a bad experience, have actually ever attended any of these sessions to form this opinion?

Joe Villeneuve
REcapSystem
A2REIC