All Forum Posts by: Rusty Thompson

Brian
I'm a little confused, my original hypothesis is that money is not worth a 50% equity stake. When hard money is available @ 10-15% with the right deal. The deal would have to be incredibly good & expensive to make it work giving someone 50% of the profits & 50% of the profit. It's a incredibly good deal for the lender, as long as they don't mind the liability of being a partner.
I listened to a pod cast the outlined this scenario & you are walking on thin ice from a securities stand point. Cant remember who posted it, but it was great. They were lawyers who focused on accounting. The outlined it as getting your cake and eating it too. And they strongly advised against it.

..... maybe I should start bookmarking these things.

I've tried the memory foam topper & didn't like it. I talked with my chiropractor about it & he said it was one of the worst things for your back. His prescription is the firmest mattress you can stand. I moved to a firmer mattress & I'm a lot happier.

I'm not trying to be Smarmy.... could someone please provide me a real world example of when it would make sense to take on a 50% stake partner on a long term buy and hold. Wouldn't make more sense to pursue cheaper financing? The only time I can see this happening is if this is your only option. Which means no money & a really risky bet for the lender.
As I think this through, this is really only for very large scale deals for a new investor. Things were a small time investor cant come up with the capital any other way?
If someone can enlighten I would greatly appreciate it.

Sorry for Highjacking Jeff, I hope any answers will shed some light on the particulars

Hmmm... learned something new. Can do.

I hate to be the "naysayer" since I just browsed through this topic. But does a 50% stake in profits plus equity really make sense on the side of the borrower, for a long term buy & hold. How horrible is his/her credit that they are paying such a large chunk of their profits?

If the deal is there, they can get hard money @ 10-15% plus points on the back end? Depending on the cost of the property & what is cash flowing. The "grounds on man" could end up paying a 50% interest rate & 100points.

When I very first started looking for private financing, I thought this way. Finding people that would loan me money & I would do all the work & get a small piece of the pie. As I started looking more I realized how horrible of a deal it was for me.... I also read a really fantastic article about it (i wish I could remember were) that really opened my eyes. I will try to find it.

My question to Scott, is why look so far away. I don't know what kind of numbers you are looking for, but there are properties closer to home that cash flow just fine :-)

74 properties in my target area. 787 in my state. It would def. have a depreciating effect on the rental market.

Jason S. the 8% cap with a 94% of BPO numbers you stated. Is that the numbers they are expecting to sell the portfolio at? I can imagine any investment firm agreeing to it. Low priced back stock might perform, but what about the high end RE?

Its either Ignorance, or Evil Genius. It just depends on what you think the motivation is.

Jason S. were did you find the FHFA information from phoenix? I would like to find the information for my area.

I wonder if Carrington/OakTree is code for my rich buddies. One of the effects of the current Real Estate crisis is the forced liquidation of a large portion of Americans stored "wealth". That was in the hands of the middle class. Currently it has allowed local investors to really skyrocket their business & future home owners to buy in at a reverse bubble, locking in future readjustments. This plan would essentially take a large portion of that wealth & hand it directly to some of the wealthiest people in our nation. I can't in any way stand behind this plan.

http://www.biggerpockets.com/forums/41/topics/70103-government-set-to-sell-foreclosures-in-bulk

Like I said in the previous thread. It will cause a new wave of foreclosures in the Investment property market. It will start at the top with people who bought into marginal deals and work its way down as the market becomes more & more flooded. It will temporally stabilize the housing market, until the ban on selling them ends. Then I imagine the holders will try & sell the back-stock. Which will flood the market with a large inventory of low priced homes. Causing another dip. Just my opinion, but it seems logical to me.

I think a better option would be to package the properties & sell them at auction in smaller chunks. Which would spread out the profits & allow local investors to create funds & compete.