All Forum Posts by: Steve Hall

In 10 years she will have social security to supplement her rent. 

Instead of trying to help your mother (with something I doubt she has asked you to help her with), why are you not thinking about yourself? If you project out your current financial situation, where will you be when you are 60?

If I were in your shoes, I would borrow that $28k from my mother, invest it in a performing asset, and pay her 6% interest for 30 years. It's win/win.

It depends on what you are bringing to the table. Are you a contractor? Are you paying cash for the property and need $95,000 to do the renovations?

Just based on the fact that you've presented a rehab estimate without ever looking inside the property is quite concerning. Now if you came to me with report showing all the estimates for all of the repairs that need to be done, and you had something to contribute, I'd consider it.

BTW, welcome to BP.

@Leah Gaspard I am not familiar with NJ rents, but those rents seem very high... are you SURE you can get $1,700 per month for a 1+1? Either way, this would obviously not make a good buy & hold investment if you're going to lose money every month by renting it out for $3,800 per month and having expenses of $3,900 per month. Double check your numbers, or have someone else review them.

Your plan to house hack this property could work though. For instance, assuming you could actually rent the first floor for $1,700 per month, and assuming your PITI is less than $1,700 per month then you could live upstairs for FREE and have your tenant build equity for you. If you're able to, take all of the $1,700 per month and put it toward your mortgage, adding any extra toward principal. After a few years, you can sell the property, hopefully for a 10-20% profit and then you can take the profit, and the equity and go buy a positive cash flow property.

If your 30 year fixed mortgage PITI is more than $1,700 month, then I would not house hack it either.

Welcome to BP. Your first assignment is to get a formal agreement in place between you and your boyfriend. Find a real estate savvy lawyer and CPA and start talking to them about what you want do. Pay them to form your LLC or LLP and draft your operating agreement and articles of organization. Then make sure everything business related is purchased, paid for, and contracted by your business.

If both 50/50 partners save 5% on supplies, then they would split the savings right? If they find out the water heater is bad, and needs to be replaced, they both split the expense right? 

If you save 3% on broker/agent commissions, I believe you should split the savings. I am not saying you can't negotiate it another way, but if I were lending to you on a 50/50 deal, I would want 50% of the "profit".

If the investor with the spouse objects, then I would suggest we get a neutral 3rd party agent. As soon as that investors realizes that we both lose 1.5%, I think he would see things my way.

NOTE: For all you agents out there: yes I know that the agent has to split their commission with their broker, but I just went along with his example for numbers sake. If the percentages change, the point would still be the same.

 Run the numbers and find out!

Welcome to BP @Isaac B.

You're asking the wrong questions though. Instead of "What would you guys do?" You should be asking, "Is this a good deal? Should I go through with it?" Then I would ask you what you expect to charge for rent, what expenses do you expect to have, what is your projected NOI, what is your exit strategy?

Instead, you are asking about etiquette, and worried about "making anyone angry" and "going back on your word". Are you familiar with Myers Briggs personality types? If so, it's quite obvious that you are an Extraverted Feeler (Fe). This is a great personality trait - my wife has Fe. She cares more about everyone else than she does herself. It's just not going to work for investing. In my opinion, you need Te to be a great negotiator. If your brother is a Te, great! You'll make a great team. If he is not, you'll need to find a partner who can help you...

Just the way you negotiated this deal tells me you need to step back from this deal, and educate yourself more. You should NEVER make an offer on any FSBO property by splitting a 6% commission in half and then offering 97% of asking price! With an investment property, sophisticated investors figure out what they want for a GRM, or NOI, or a cap rate, or a cash on cash return, or instant equity, and THEN make their offer based on the numbers they want.

Yes to an LLC, yes to a lawyer, yes to a CPA, and yes to high risk of losing your friend. Is it really worth it?

@Derek Mendez They call them CONtractors for a reason. Why are you even thinking of damaging your relationship with a lender when you still think you can pull off a $25k profit from this?

This is a life lesson (Actually several lessons). Learn from this and move on. Every investor has a horror story. Now you have yours. 

Fire the GC for breach of contract, finish the job, sell the property, collect your profit, put this behind you, smile, and move on to the next one... without a partner.

Welcome to BP @Jefferson Simmons. In the future, when you ask for "ideas" here on BP, you've got to spend more than 30 seconds on your post if you expect any kind of legitimate response. Most experienced investors will just ignore posts like this. It's impossible to respond to your first forum post knowing so little info about you and the deal. Is this your deal? Are their partners? Did you sign yet? What was the accepted price? Has it been appraised? What is the ARV? What does "half way funded" mean? How much can you/did you put down? Is it within 100 miles of where you live? Is it in a flood zone? Do you have a property manager or do you intend to manage it yourself? What county & state is the property in? What is your net worth, including the equity in your home? What is the occupancy at currently? Do you have the funds to renovate it? And who calculated $20,000+ per unit for renovation costs?