All Forum Posts by: Rick Maningas

First off, congratulations. That is wonderful news. 

I wish Milwaukee had a zoning board to limit or monitor rentals. I deal with buy, rehab and sell owner occupant properties and there is nothing worse than seeing a neighborhood going down the tubes because of rentals. 

When talking ROI I like to talk about gross ROI and annualised ROI. Gross ROI is just taking the net profit divided by your total investment. $25,000 net profit divided by $100,000 investment equals a gross ROI of 25%. This ROI does not take into account how long it took to earn your profit. If it took you six months, in theory you could then do two deals a year so your annualised ROI is now 50%, or $50,000 profit divided by the same $100,000 investment. If it took two years to make $25,000, your annualised ROI is reduced to 12.5%. Just a few extra thoughts based on some of the additional comments.

Similar to what everyone is stating, I do everything from beginning to end, excluding funding. I find the deal, negotiate, close, determine rehab strategy, have my team rehab the property, have my team sell the property, and because I do two year land contracts, manage the property. I also have a bookkeeper and accounting firm for all of that. 

I want to add that whether I have one investment partner, two or at the most three, these people or self directed IRA accounts are members of the LLC that owns the property. Therefore, should anything go sour or sideways, they do not have to go through a foreclosure process since they already own the property. As a side note, the property LLC may hire me as a property manager and we have a joint venture agreement or I may have a small 2% share in the property with a defined profit distribution clause.

This has been discussed in great detail over the paste few days on other threads. I'm not sure exactly how but do a search on jv agreement, joint venture agreement or some such wording. 

This issue has been presented recently on BP. Do a search on JV Agreement or something some such thing.

I tend to slightly disagree with the posts above. Although I agree that 100% of your monthly lease payment is not applied to the purchase, both parties can negotiate to have some portion of the rent applied to the purchase, especially if the rentor will pay above market rates. Typical above market rate would be $100 to $200. This amount would apply to the purchase price and be considered additional down payment. I have heard that lending institutions want to see these additional payments to consider the buyer in a true lease option situation. The lender may then consider the situation either a refi (if the lease is more than 365 days) or closer to a refi than just a new purchase. My comments are based for Wisconsin. 

There is a lot of input here. Let me put my simple 2 cents in. I moved to Milwaukee without knowing one person. To build my reputation my first three deals I did without receiving any compensation. I made it clear that if things worked as I planned, the future split would be 50/50. Things went better than expected so the split went to 50/50. Then as things have progressed I am at 60/40, 60 for me unless there are unusually circumstances like a large dollar commitment, other people they can refer to me, etc.  In a nut shell, I gladly paid to get my business going with my financial partners. Now, I have my reputation, my business model, my profitability, and my plans to expand my business. 

Do you have a business model that you would present to your potential jv partners?  Can you tell them what kind of deals you are looking to do?  What kind of results you plan on achieving? What you offer, what you are looking for them to offer?

Just a few things to present or think about. 

I have so far had nothing but good results. I keep my partners totally in the loop. I communicate the good, the bad and the ugly. 

@Amy Oltendorf Donna and I do remember you coming to our house to play Cashflow 101. I've had a free membership for a while but didn't even read the posts. I finally got into BP and have started to figure out how to use it. Therefore I decided to join as a Pro. 

For me the cost of a WI LLC is so cheap that the asset protection that separate LLCs give per property is worth it. Done correctly, if a slip and fall lawsuit is levied on one property the other is protected.

Bob, here in WI it costs $130 to create an LLC and $25 for the annual report. Since every property probably has a different group of partners, I create a seperate LLC for each deal and when the property is sold, I dissolve the LLC. I don't do loans. The property is owned by the investor group of LLC members.