All Forum Posts by: Steven Goldman

TJ Kuhn: I have found that having a general contractor participate in the partnership is unworkable. You are better off reaching a written contract with the contractor which contains a defined detailed scope of work. The contractor can make his profit by completing the construction. You can incentivize the contractor to complete the work quickly by having a bonus clause with a completion date. You and your money investor can work out the details of your partnership in your LLC operating agreement.

Ground up construction usually takes more than 6 months. If the contractor sets the bonus date you will have a better idea of his thinking on the length of the construction. Good luck and keep moving forward.   

Hi Nick, I am not sure what you are asking. But let me take a stab at a general answer. You can structure a partnership with a contractor any way you want. The question is what is the partners contribution worth? If the partner is going to run the construction job like a general contractor and make a general contracting fee, than you could give the general contractor a bonus for completing the project within the scope of work, estimated cost and on time. In that situation he is more a team member than a partner. If he is really going to be a partner than you have to determine what percentage of ownership his contribution is worth. Keep in mind he should not double dip. Good luck and keep moving forward. 

Christian Riffle So many investors are ready to take the next step and lack the capital to do so. May I suggest that you look for and locate a good BRRRR property. At the same time take active steps to locate friends, relatives, club members or associates, who have capital but are not inclined to spend the time and effort to search for real estate investments. Once you have found a good target property you can shop it around to your network and, find partners, or JV partners, who are wiling to contribute capital or credit, in exchange for a piece of the deal.

I have always found it is easier to find capital and a guarantor than find a good deal. Find the deal and it will lead you find the capital. Of course it takes perseverance and work. Locate a good REI or real estate meetup and attend them in order to find a good partner. Good luck and keep moving forward!

Vinny Palm Sounds to me like you need to find a JV investor. Either a friend, business associate , family member, or meeting associate. They can contribute the down money. You can manage the rehab or the flip or hold. When the property is rented or sold you can refinance or pay the JV partner from the proceeds.(Or, he can stay in a hold deal) Either way, that is the best strategy when you have a great deal but a capital shortage. Make sure that you either trust the JV partner, or have them sign a non compete. Finally, if none of these options work, you can wholesale the property if it is that good a deal. You can always message me if you want to discuss this deal. I am in Philadelphia and have some knowledge of the Pittsburgh market. Good luck and keep pushing forward. You are on the right track!

Amby Bhagtani  Lets start at the beginning. One of the biggest challenges with out of state investing is knowing both the purchase and construction market. If you are purchasing out of state you should gather as much due diligence before you sign the contract as is humanely possible. You are at a disadvantage not being in the area. We have had customers who have found themselves in the same position. One of the things you can do to avoid this type of problem is be careful with how you word your contingencies to allow you to receive a refund of your down money if,after due diligence the deal does not work. For instance do you have the ight mortgage clause or was it a cash purchase? 
Did you comply with the inspection periods?  

As to your current situation. You should have a qualified real estate attorney review the contract and give you your best options. Sometimes walking away and losing your deposit, is better than, going all in and, losing your shirt! Good luck and keep moving forward!

@Alexander Ignatenko   Good afternoon. I agree with  the comments about creating a messy personal situation. But, if you are moving forward you can find a tenants in common agreement at Rocket Lawyer for a whole lot less than thousands of dollars.  The devil thereafter is in the details. Good luck and keep moving forward!

There are many good self directed IRA companies who can assist you with this project. It is easier to solicit someone else with a self directed IRA that is leery of the stock market and would prefer to fund a real estate project at a better rate of return. This was much more popular in 2010 and thereafter when the market crashed and you could not get a safe and good return on your investments. We my be entering such a period again. Good luck and keep pushing forward.

I seriously encourage you to go to a meetup of investors who do rehabs. and learn all you can about the pitfalls and traps before you try to do your first rehab. It all seems simple, but a successful rehab. requires a strong knowledge of the cost of materials and also management of contractors. Too many newbies think you just buy the property, rehab. it and make a profit.  You need a strong understanding of human nature to manage the contractors and other vendors who might try to take advantage of your lack of experience. I recommend you get the bigger pockets book. J Scott on Estimating rehabs and become aware of the costs and methods of dealing with contractors before you attempt a rehab. Good luck!

Hi Jonathan: I see you are a real estate agent in Lowell Mass. My father was the president of Ames textile the then oldest operating textile mill in Massachusetts's. I believe it is now a museum and my father has passed away. For your readers why did you pick Rochester, NH to acquire a multi unit? How did you fund the purchase? How many multi units does your group own? I have a borrower who is very active in your area. Maybe you should connect. Good luck and keep moving forward. 

In order to get a accurate answer to a great question you will need to provide the following information:

Purchase Price:

Rehab Costs

Taxes 

After repair value

Fair market rent

Armed with that information a lender or investor can give you a reasoned opinion as to the best strategy for this deal. It is important to know the refinancing numbers for a fix and hold. It allows you to calculate your total carrying and transaction costs as well as the final P.I.T.I. If you provide me with the information above I would be glad to give you my two cents for what its worth! Good luck and keep moving forward!