All Forum Posts by: Mark S.

@Jeff Wallenius, I'm waiting back on some more concrete figures on the most recent deal.  Preliminary discussions at the moment.  At first glance / estimate, we're looking at about $50K investment for about 25% equity with a couple other partners.  10% down, the rest due prior to closing.  Investors paying about half of total purchase price in cash and seller considering carrying back the note for the other half at 6% interest rate (some terms, like payback period, still being negotiated with seller).  Estimated cash-on-cash return for investors of around 9%.  All tenant screening/placement, rehab (if needed), and ongoing property management handled by wholesaler/syndicator.  

@Steven Leigh, not sure what the wholesale fee will be on this deal (if the "normal" 10% or not), but I imagine it may be lower due to the much higher overall purchase price.  I'm also assuming the "normal" 10% equity for wholesaler/syndicator/property manager as well.

Hope this helps.  Can post more details once I know more, but this should be pretty close.

@Jeff Wallenius, thanks for replying.  The 10% is upfront (I believe another 10% of profits down the line if sold, too, but I have to double check that).  I don't think the wholesale fee is capped, so depending on packaged purchase price, could be higher.  I like the equity part, as it seems to align interests, but it essentially forces the investors to pay more to "buy" the syndicator's equity portion of the deal.   Are these terms generally negotiable?  I know just about everything in real estate is, but don't want to offend anyone either if this, in fact, is standard (which I got the impression it was, but wanted to double check).

I know this will be different for everyone, but I wanted to get a general sense of wholesalers' terms and what's considered standard practice. For example, I am in talks with a group that fulfills multiple roles: wholesaler, syndicator/equity partner, and property manager. Here are the proposed terms: Wholesaler: for bringing deals to their investors, they take a 10% wholesale fee (based on the "packaged purchase price" to the investors). Syndicator/Equity Partner: additionally, they take a 10% equity stake in the property. Property Management: they will also manage the property at 10% of gross rents while property is occupied. I'm interested in everyone's thoughts/feedback on the above. The investors essentially fund the deal and are totally hands-off. Everything else is handled by the one party. The property management piece seems standard, but I'm curious about the wholesale fee + simultaneous equity position. Is this standard?

Personal Capital. Just realize they use this as a lead generation tool and you likely will get a (sales) call from them wanting to manage your stock market investments (they're an RIA). You might consider "accidentally" typing a wrong digit or two in your phone number to avoid the calls. Great tool, though, but does have quirks every now and then when things don't update properly. Customer service will likely take 3-5 weeks to fix the issue (at least that's been my experience). Other than that, it's great. I use it daily.

@George Faulkner, welcome to BP.  

Dah-chest-ah! I went to school there many years ago. Had some friends that lived nearby. Area was pretty rough back then with gangs and such. Hopefully things have changed since then. BP is a great site. Best of luck.

Martin S. , interesting perspective. Thanks for sharing.

Armando Payano , are you a sponsor? What type of investment are we looking at, dollar wise?

Jim Kennedy , just going through my posts and figured I'd give this thread a bump along with a couple updates: UPDATES - I have formed the LLC and decided to utilize a local attorney to do so. - I applied for an EIN online at IRS website, even though I probably don't need one. This will allow me to provide EIN instead of SSN to sponsor for K-1. - I will be opening business checking account shortly. OUTSTANDING QUESTIONS - Are attorney fees to start LLC and file with state/county considered organizational costs ( vs startup costs)? - If so, can the organizational costs (assuming under $5,000) be deducted in full or do they have to be capitalized? - Does it matter whether I pay attorney fees from my personal account vs LLC account?

Dave Holland , I tried to contact you (using app on my phone) and it says contact details are hidden. I was hoping you may have some feedback on my question in a different post about whether or not it matters if I pay my attorney fees to set up the LLC out of the business checking of my personal checking. I'm trying to keep everything "separate" and treat it like a business, but with a new business checking account and deposit hold times, it will cause a bit of a delay in paying my attorney. I'm assuming from a tax standpoint it doesn't matter (as it flows through to my 1040), but just wanted to confirm with an expert. Stefan Knipp , I am in the process of doing some small scale syndication buy-and-hold investing and had an extensive conversation with my attorney. As you might expect them to say, the more layers you can create, the better. In my case, I'll be acting more like a limited partner as far as the investment goes - I'm just writing the check and not taking part in any management. In my case, the LLC may be viewed as "overkill" by some, but I'm okay with the additional cost. In your case, if you'll be actively managing, I would think the LLC would be that much more appealing. Nothing wrong with getting an umbrella policy either, just in case. I would definitely suggest contacting a local attorney and insurance agent to discuss in detail and go over the pros/cons of each. Best of luck.