All Forum Posts by: Tyler Purcell

Hello everyone,

I am a new investor about to do my first deal. My first deal will be a rehab, funded by my uncle, who lives out of state and will be mostly hands-off. He has experience in real estate investing, and will be looking at the numbers and obviously making sure it is a good investment. However, he is not local and will not be able to do any of the work, and will merely be an investor. This leaves the work and property hunting to myself and a friend/partner. The partner is like myself (handy and hard working) so he will be kicking in some sweat equity and also has connections with contractors and has a agent family member that will likely sell the property for us.

Now, my question to the BP community is "How do I structure this deal?". I could bring my uncle on as a hard money lender, but for my first deal I think we might rather split profits. What kind of split is typical? I know in business, 65/35 is typical. However, this being my first flip, 50/50 almost sounds reasonable. Will I own? Will he own? Will I write him in as a partner when I form my LLC? Please advise.

With my uncle's share out of the way, how do I split things up with my partner? So far, I have raised the funds, found the deal, etc. However, he will help with the work and selling of the properties, and is a valid resource when it comes to knowledge and connections. 50/50 again, or is that too generous?

Everybody's advise is appreciated, but please, let's keep this thread about the structure of the deal. The deal itself, my experience, and my favorite color are all irrelevant.

Thanks!

Danny,

What happened to this property? Any updates?

I am in need of a good calculator I suppose. I have a 660 credit score and only ONE debt - a $168 per month car payment that I owe $6500 or so on. My debt to income ratio is around 0.08.

I dont have MLS in front of me but we ran a calculator in MLS for loan qualification and I believe I ended approved for up right around $35k. Of course, that was not a lender, just a calculator.

Thanks everyone for your help!

I think I could try the FHA route and shoot for the 3.5% downpayment, which is under $1k). I can cover the few thousand $$ for that and the closing costs. Heck, I might even be able to scrounge up enough for 10%. I am positive I can do it as an owner occupied deal, that way I can get homestead on it too.

Now we still have the issue of me qualifying. How do they calculate income based on my previous employment? For example, I was paid an hourly rate for two years at the same company, with steady raises. If I used my last few months of checks as proof of income, I would be making about 20k per year. But if they estimate that what I earned last year will be roughly the same as this year, then no doubt I will not qualify. Is there anything else that might help me?

One more item worth mentioning - in a year, when my lease here is up, I could very well move into this condo. This is the final reason that makes me feel like this is a win-win situation, because even if I lose a bit of money in the first year I will make it up in rent payments over time.

Thanks Andy!

That's precisely what I feared. Perhaps you guys can give me input on my current thought. I think I'll find a small private bank here and try to get a loan to cover the purchase + closing price. Then, I will open a personal line of credit for a few thousand in order to pay for the renovation work. When the work is complete, I will have it re-appraised for ARV. With a higher value placed on the condo now, I will re-finance and roll the personal line of credit into the mortgage.

Hello everyone,

I am new to real estate investing and I found a place that I feel is an excellent investment for me. I currently work for a real estate appraiser and we have done extensive research on the property and she also believes it's a good buy.

The property is an REO 2BR/2BA condo. We were looking for a cheap fixer upper for me to buy and fix up in order to rent it out. After searching MLS for quite a time, I eventually found this place. Here's the kicker - it's across the street from me. Literally. I can walk to it. This will make it easy for me to work on until its ready to rent, then when it comes time to rent it out I can easily monitor it's activity.

Lets get down to details. The property is an 1100 sq.ft. condo located on the 3rd floor of a 3 floor unit. It overlooks the pool and is a part of a small community of units. It's was foreclosed on in late 07' and as of Feb of 08' it was listed at 185,000. It was slowly dropped in price until it was sold to another bank. It was listed again and dropped again and again and then finally sold or somehow transfered to Chase, who holds the loan now.

Finally, the place is for sale at $34000. We need about $2500 to close on it and anywhere from $3k to $5k to do repairs. We think we can get the property for 30k or 32k and likely wont use an agent or anything to buy it, because she is a licensed realtor. I have the skills to do almost everything myself. Because it's so close, I can work on it really easily as well.

Cash Flow (Per Month)
$210 - Loan for 30k @ 6% for 20 yr. term
$200 - HOA Fees (Actually $194 per. mo.)
$100 - for monthly repairs etc. (way overkill?)
Taxes are $600 per year.
Insurance is no more than $900 per year.
I also gave myself an extra $500 per year for repair.
This accounts for 15% vacancy (will take about 2-3 weeks to repair)

Total expenses per mo.: ~ $670

I currently rent a 2BR/2BA apartment across the street for $1220 per month. My current rent does not include water, or any other utilities. After the renovation, this condo will be significantly nicer than my current unit, and the HOA fee pays for water and cable. With this in mind, I think it could be rented for more than my current apartment, possibly for $1400 per month on the high end.

If rented at $1100, this would flow $3040 per year by our estimate.
If rented at $1400, this would flow $6100 per year by our estimate.
This means $250 to $500 per month.

THE BOTTOM LINE
I have no cash. At all. I can raise up 2-3k in funds from my family but will need to pay it back. I was previously a student and I have little employment history. I JUST started a new job making $1700 per mo. (base pay) to $3000 per mo. (commissions). I also work part time for the appraiser, who will provide proof of employment. However, I do not have checks from either of them yet. I DO have two years employment history with another company, but as a student I only made about $13k per year with them.

We need to get a loan for the value of the property and come up with enough cash to close on it and repair it (5k high end estimate). How can we make this happen? No, I do not have (and can not get) a co-signer.

Hey everyone,

My name is Tyler and I am a highly ambitious, self motivated individual with an interest in purchasing undervalued real estate and renting it out. However, I am very young, and don't have any money for a down payment or enough cushion room to feel comfortable owning a piece of property, especially a rental.

For the next year or two, I would like to work and save. I could work my normal job (low paying hourly job) and come up with a bit of cash by next year, or alternatively I could find a new job or side job.

Should I be seeking a job in construction type fields, or in real estate? I have the opportunity to get my license and perhaps work for a real estate biz. Would it be more beneficial for me, as a future investor/flipper, to actually learn the skills necessary (find a job with a remodeler etc.) or work for a real estate business?

Thanks everyone!