All Forum Posts by: Ronald Perich

@Sergio Limonta, it's tough to know what works for both of you, especially when we don't know what your potential partner wants to accomplish with his investment dollars. You state you want him to loan you the money for both purchase and repairs, but is that what he wants? 

You need to consider the risks he is taking versus the rewards he'll receive. Since you are new on the investing side, he'll be taking on more risk and will probably want a bigger reward.

You could do a straight lending relationship. He'll probably want some points up front (to guarantee a return regardless of how long you borrow from him) and a pretty high interest rate.

You could also do a preferred partnership arrangement. Under that scenario, he receives a guaranteed rate of return on his money until you have repaid all of the original investment. After that, he's a partner in some of the cash-flow. 

Perhaps he'd rather be an equity partner. No interest on the money, but receives a percentage of all cash-flow in perpetuity. 

From your perspective, you need to make the deal worthwhile, or you'll lose the motivation and drive to continue dealing with the problems. Believe me, there are going to be times when you are plum sick and tired of this game and just want to throw your hands up and hide under a blanket. If you're only getting a small portion of any profits, how long will you keep going.

But in the beginning, you may need to expect a much smaller cut than you'll be able to get when your investing career matures.

I just heard Ken McElroy talk about his first big deal on the Lifetime Cash Flow podcast. Ken owns over 10,000 units. On his first big deal, he gave 90% of the equity to the investor and 10% to himself even though he did all of the work. As he says, "Nobody cares about the splits outside of the partnership" and the momentum took off from there. "Those investors took a high degree of risk" and he doesn't regret that deal at all. "That deal legitimized what we were doing"

@Sam Leon, I would not touch any of the original amounts. They made a security deposit at a rate you deemed was sufficient enough to cover damages at the time. If they are renewing, you have eliminated one turnover cost (time and/or PM fees). That in-and-of-itself is a cost savings.

If anything, you should consider giving your resident a small gift during a re-lease, especially if you are raising the rents. Something as simple as sun-blocking blinds for the bedrooms or usb-enabled electric outlets. It's a small cost, but it shows them you appreciate their continued residency and it is an improvement to the rental.

In fact, I know of some owners who will give a portion of the deposit back every time the person re-leases with them.

One thing you should do, however, is ensure that you keep a good accounting of how much is on deposit. And that amount should be prominently written on the new lease they sign with you.

To Your Investing Success,

Ron

Hope it's allowed to give URLs

http://metroeastreia.com/. They have had some turnover in leadership. New secretary and president.

https://www.facebook.com/ILREIA/?hc_ref=SEARCH&fre.... This is one of the @Account Closed. He's pretty active in the area, but I'm not sure how much time he has right now.

I don't think I would have availability in the near future to go visit them, but why don't you put together a portfolio view of them along with your thinking and the community can give you some advice on what you might be up against.

So he would be responsible for the rent due in September according to the lease based on this response. That should be the only thing that is mentioned on the accounting for the deposit statement if he really didn't ever live there. There shouldn't be any damage charges at all.

The only part I'm curious about is where the two-weeks notice is written in the lease. It wasn't in section 10 you provided. And that Section 10, Part D is a little curious as well. Your friend might be able to ask a judge to rule on the conflicting statements in the lease.

But legally, he may be out of luck.

As far as the sixty day return policy, that's a really long time. We have 45 days in Illinois, but have to have a written account of charges or return the money within 30 days without a written account.

@Michael Shear, follow Robert's advice. There is a Metro East REIA meeting on the 2nd Monday of every month. Also look for the ILREIA run by @Account Closed. I don't have interest in SFH as a long-term buy-and-hold strategy, but I'd be willing to help you size up the opportunity.

The challenge is finding somebody who's willing to loan on five houses. Most will want to do that a five separate loans. Perhaps there's an opportunity for some seller carry-back or even owner financing on the one that's free and clear.

If you're thinking about flipping one or more, then you can use different means of financing those through hard money.

@Josh L. To get their actual email address, you need to go to your Zillow inbox. Next to their name is their real email address, not that fake Zillow one.

 First, don't beat yourself up about not getting replies. With Zillow, Trulia, and the rest, this is very typical. It's just too easy for them to click the button to send an email. 

Second, when you do return the email, are you sending it to their Zillow email or to them directly at their personal email? The Zillow email almost always garners zero responses. 

Third, when you do respond, make sure you include one a picture of your rental to quickly remind them of the property in question.

Fourth, I started putting in a property-specific email address and/or text number in all of the posts and telling them that is the best/only way to contact. 

Fifth, for those who respond to the better channel, always do some kind of pre-screening on them before making an offer to show the place. Otherwise, you'll only get 20% who will actually show up.

Sixth, if you can afford it (how much is your time worth), see if you can't hire someone to do the coordination activities like pre-screening, answering emails, responding to texts, etc. A good VA might charge you $5/hr to do this task.

Hope that helps! Good luck with your investing future!

Sorry, @Scott Trench, but I don't follow. He paid a landlord for nine weeks of rent while waiting for approval from the halfway house? And the lease with this landlord was for only nine weeks in length?

Once he didn't get the approval from the halfway house, he terminated his lease?

Do I have the story correct? If not, could you just focus in on the landlord of the short-term rental?

How well protected are you in this arrangement as a lender? You're basically financing the investment at 100%. No equity in the property for the investor means it's pretty easy for them to walk away.

They come in for a year, suck their $3600 out of the property in cash flow, do no repairs or maintenance, and you're left holding the bag for a property that's probably worth less than the day you bought it.

If the note goes non-performing and you're forced to sell, you'll probably get no more than $6-7K for it.

I really see you as taking all of the risk and getting very little in terms of reward.

Oh, and Dodd-Frank doesn't limit you in the number of loans you can make. It limits you in the number you can make without following the Dodd-Frank guidelines. 

 Every Podio application can have a web form that can be filled out. I think you click in the wrench icon to get the URL. Then use something like bit.ly to make a user friendly URL.