All Forum Posts by: Account Closed

 Hey Austin- just wanted to say thanks. This was an awesome post and if you don't mind, I'd like to delve a little deeper with you on these types of partnerships, especially ones where it's just somebody coming to you with cash. 

I want to re-read your postings, and make sure I got a good grip on what you're saying, and then I'll tag back at you later, if you're okay with that?

This is an excellent thread. My wife and I are forming our own LLC and while we have the funds to invest ourselves, we're looking for silent partners, mostly just to bring cash up front. I have been looking at the waterfall distribution for structuring investment deals, and I think I like that method, but am wondering the following things:

1. For the investment terms - do most people just look at repaying an investor a certain percentage and then they're cashed out (say they invest $20k and you pay them back $22k (10%) over a period of time?) and then that's it? Or do folks make it more of a long term (you get x% of the rent payment every month on that unit?)

2. Any good ideas for putting 'payout' terms in the partnership for if you sell the asset or if they want to be bought out?

3. Legal protection for them and you? (Make them first on the loan or similar?)

4. Anything to definitely include? Definitely avoid?

5. Any good 'boilerplate' agreement contracts for a starting place?

Thanks all!

Russ

Well, so far my experience has shown me that it depends a lot upon the time you've had the LLC active, the previous activity, and what you've got in the bank. Not to mention that different financial institutions will treat you differently.

Honestly, if I hadn't been looking at funding the LLC myself and just moving forward like that, I'd probably be looking at a hard-money lender to get things moving, then refinance the property when it was repaired. I'd probably also consider refinancing in my name, then moving it to the LLC once it was done (may have to be careful with that, though...).

 Hi Korie!

Thanks for the reply. Yup, I built in closing costs ($2k), refinancing (another $2k) and then estimating 10% for selling fees (if and when I sell- looking to buy-and-hold for an initial strategy). 

Initially, I'll be fronting the entire thing (I'll be loaning the LLC the money). I have 2-3 possible lenders after that, with one favored go-to. I will have at LEAST a 6 month seasoning period, but am prepared to deal with 12.

All the factors you mentioned are included in the BP BRRRR calculator, although I left my cap-ex low because most (all?) of that will be going upfront in the $43k budgeted for those repairs.

Have you had any experience dealing with a OOS remodel? It's been a bear trying to estimate repair costs because things here in Seattle are so danged high that prices are ridiculous to get any work done... if you can even get people to call you back. This is back east, and I know this area is recovering, but still not the boom-town we have out here. :-)

Hey all- came across an OOS BRRRR opp in Georgia, near Atlanta. I wanted to get some opinions/thoughts from folks. Here's what I got:

Asking price $62500 (not what I'm going to offer). 

Comps put similar properties in good shape at about $88k-$95k (I'm using low end for estimate)

It needs:

Roof (I budgeted $10k)

Siding (I budgeted $10k)

Minor structural (I budgeted $3k)

Termite remediation (I budgeted $5k)

Mold remediation in the bedrooms (I budgeted $5k)

Sheetrock work (I budgeted $5k)

Carpet/Paint (I budgeted $5k)

Total repairs are budgeted at $43k.

Kitchen and 2 bathrooms are in good shape. Landscaping is okay. HVAC is okay. 

House value at $90k is about 80% of high-water mark appreciation (prior to 2009)

Currently rented at a little over $1k/month. Tenant is responsible for all utilities and lawn care. Property taxes at around $1600/year. Tenant is current and intends to stay... 

I have a trusted team with a good reputation to handle repairs. 

I was thinking about offering $30k all cash, financing the repairs, then using a BRRRR method against a valuation of $90k (would try for higher) and pull $72k out (or close to it) to re-start the process somewhere else.

The calculator numbers put my cash-on-cash at 112% after everything and the re-fi. It seems to pencil out okay, but I'd sure like some experiences/thoughts/opinions. :-)

Thanks in advance!

 Hi Ken

Thanks for the reply. We're actually doing the stock market as well (diversification), but wanted to branch out into real-estate for tangible assets. Your point is well taken, and I completely understand the cash-flow position you're taking, and certainly wouldn't say 'no' to it. After doing the math on the calculators, and finding that we can (conceivably) obtain a cash on-cash of 9.5% or higher (better than any stock returns as of late), REI still makes sense provided we can find the right deal(s).

Hi all-

I'm in the Seattle area where everything appears to be clad in gold, including the cardboard boxes from Amazon, which explains why it's so danged expensive here for real-estate. Including the properties that have nothing but cardboard boxes from Amazon on them.

I have been following the BP Podcasts and looking through the forums, and I've seen multiple threads on turn-key solutions and investing out of state, as well as the pleasures and perils of dealing with property management companies. In addition, I've seen many a topic on the challenges of getting started, dealing with renters, rentals, and your own full-time job, and others dealing with setting goals and achieving them.

So I thought I'd throw this all together and create the most awesome thread of all-time (or at least until somebody else comes up with something cooler...).

I have been using the BP calculators on Roofstock.com properties following both the BRRRR and standard Rental philosophies espoused both on the site and within the podcasts. I am developing a strategy that accepts a 9.5% cash on cash return (minimum) in exchange for the advantages that Roofstock has and the amount of work that they do up front in researching/accepting the property. My goal is to not to be able to quit my job, but rather to start buying properties that are in markets that are appreciating by around 3% every year and starting to build equity in them. As much as I love the BRRRR story, I simply do not have the time at this point to delve into that arena. I need to get rent-ready properties that don't need major repairs/remodels.

My challenges are primarily time based, as in I hardly have any extra. And while initial cash down won't be that much of a problem, I can do a lot more when the houses are around $70k-$110k, than I can when the cardboard box starts at $300k. In addition, my own personal risk is less if I have a property at $70k that goes completely sideways, than one at $300k. 

I would love to know what people think about this, or if anybody has done this and has sage advice. All replies appreciated, with bonus points for really good puns. :-)