All Forum Posts by: Samuel Lacroix

@Chris Walters Thanks for the insight. If I was to sell equity in a project, that would be the silent kind. Like you said, I don't want to deal with people in th day-to-day decisions.

Merci @Chris Walters, that was enlightening. After some thoughts about it all, I think the real question is: At what point is it worth to give up equity over faster growth.

Just to clarify here. The 45k isn't pulled out of his credit line. It's just frozen (he can't use it) to allow the loan to be 45k higher. If he were to pull it out of is credit line and pour it in the deal, the loan would be 45k lower. So in the exemple above, instead of 70k after-sell cash, we would get 115k.

@Michael Le Thanks for the insight. I have some thoughts to chew on :) 

If that's not too muh to ask, would you mind to take a look at another thread I need input on. https://www.biggerpockets.com/forums/88/topics/412885-need-validation-on-my-financing-set-up

Well, that was my initial thought. But my father doesn't contribute 45k of hard money. The bank just freeze the amount on his house mortgage credit line as collateral and lend us 45k more, making the mortgage 313k (instead of 268k of my father would've put 45k cash).

I just want to make sure my math and thought process is right about this.

I'm currently looking into a 335k projet that need 75k (cashdown, legal fees, some repair, etc). I would buy with my father. I pour 30k cash and he provide 45k of collateral on the financing (which mean the bank finance 45k of the 67k cashdown needed, and  my dad see this 45k frozen on his mortgage credit line on his house).

Say we sell in 5 years and all in all we get out with a net 70k. 

Am I right to say that I walk out with 50k and my dad 20k? (I take my initial 30k bak and we split de diference 50/50)

@Michael Le Why do you suggest borrowing over equity? Because of a better pay off in the long run?

FYI, I just got out of a meeting with a notary, and a joint-stock company isn't regulated by the AMF, which is the SEC equivalent in Quebec, as long as it's friends and family.

I curently own 4 doors, down from 6 because of a recent sale. I'm actively looking into my next project but I want to grow faster and also find a way to let people who want to invest with me do it (the later one helping the first one)

Thanks guys for the input. I will seek legal advice a notary friend of mine.

@Robert Fogel Obv I would start with a single property. But I like plan ahead as well :)

What I'm considering is something private, so out of the stok market. People would by shares at a pre-determined price for a certain % of the company. Those share would something like silent partner shares, meaning they would have very little to say about the day-to-day decisions. What I'm not sure is how to set it up so it's fair and everyone got is right part of the cake. 

Let's set up an exemple:

Say the I want to buy a multiplex at 900k. I need to raise 100k (cashdown, legal fees, etc). I get a 720k loan on 25 years at 3.5%. Say I pitch in 30k, Investor A 40k, Investor B 10k and Investor C 20k. All that inside XYZ inc.

So I got 30% of the projet,

A got 40%

B got 10%

C got 20%.

But what if C wants out two years later?  What if, 4 years later, XYZ inc what to acquire a new building and need to raise capital and find Investor D ready to pitch in 50k? How do you evaluate, through the project, the value of shares?