Posted by di on December 26, 2001 at 21:39:55:
Woody, Try the library. No cost, but a LOT of good information available. Really, most libraries have some good books on real estate. You’ll get a lot more organized info, learn faster, and it won’t cost you a penney. DI
Best Course of Action - Posted by KIMBERLY
Posted by KIMBERLY on December 25, 2001 at 22:44:39:
I have about $15,000 cash to do deals via my partner (my uncle). We are new and are looking for deals. I have several questions:
How should we structure a partnership? I will be doing most of the finding of deals, all of the negotiating with the seller and making the offers, all closing and title work, getting inspections and appraisals, finding investors to flip to or overseeing rehab projects while he is primarily putting up the funding? Is he acting as a private investor to my deals or should we set ourselves up as partners. What are the pros and cons of each scenario for both of us?
At this point, our gameplan is to generate cash while looking at rental properties sometime down the line. What are your suggestions for getting started?
I have three tentative deals:
one four unit apt. complex that seller is desperately trying to get rid of. They have only owned if four years so a mortgage is still on the property. Rents generate $1564 and 98,000 is still left on mortgage. In good condition.
one single family home that owner is motivated to sell quickly according to family who currently rents it from the owner. My goal is to buy low and sell high. Needs less than $5000 cosmetic repairs. Comps are around $145,000. But since there is probably a mortgage on this house then maybe a lease/option would be best
one abandoned single family home with comps at about $65,000. About $10,000 worth of work. Has been empty for about a year. If owner is motivated, I want to either flip this or rehab and retail it myself.
Any feedback is much appreciated.
Kim
Re: Best Course of Action - Posted by Scott Ewing S.W. Mich
Posted by Scott Ewing S.W. Mich on December 26, 2001 at 07:17:12:
Kim, First Woody is right about partnerships. Offer a fair rate of return on the investment but not 50-50. My only partner is the wife and she only handles the evictions (stay here Scott, we don’t have bail money…lol) Serious, the 4-unit sounds a little under rented for an outstanding mortgage of $98K. Where did $1564 come from? Is that after monthly owner paid expenses? Who would pay $384 for a rent payment? It should either end in a 0 or 5. A 4-unit is a buy and hold. You would only sell it to another investor, which could take years. I figure that I should break even on 4-units after all owner paid expenses, with one apt vacant. This place sounds a little high to do that. On the second place you mentioned, the comps are $145K but what is the outstanding mortgage? Is it an old FHA, which could be assumed. What is the owners sale price? How much after expenses could you profit? Could you offer it enough below market to get it gone quickly? As a rule higher priced houses tend to move more slowly because less people could afford to buy them. Basicly the same questions for the last deal. It sounds as if you haven’t even talked to the owners yet.
That one, at least, would be a lower carrying cost while you marketed it. Best, Scott
Re: Best Course of Action - Posted by Woody (MI)
Posted by Woody (MI) on December 26, 2001 at 04:18:57:
Hi Kim
I too am a newbie at this game. I have just been around a couple of months so this answer is going to be from my own viewpoint and I hope that if my answers are not good enough, maybe one of the really experienced investors will be good enough to shoot holes in this.
In answer to your first question, I detest partnerships. I have been in partnerships in other types of businesses and I always come out feeling like I am doing ALL the work but the partner is getting half the profits. I would tend to view your uncle as a money man and pay him interest on his investment. I guess that, to me, my time is more valuable in a situation like this than his money is.
As for question #2, I probably only know enough to be dangerous. My thought for generating cash is wholesale flipping, which from all I read, is not as easy as it sounds but it is the only way that I know of to make fast cash.
Now on to #3. I really have a hard time commenting on these 3 deals mainly because there is not enough info from you. Let me give you an example. You say that the 4 unit has a motivated seller and the rents are $1564 and the existing mortgage has $98,000 remaining. What are the payments on that mortgage? How much is the place worth? What price are they asking? What do you plan to do with the property? Keep it? Resell it? Convert it?
Is there a possibility of raising the rents? Etc. etc. etc…
I think that these questions about the properties will be of interest to any of the seasoned investors that may want to answer you questions.
As I said, I too, am a newbie and maybe you will get more and better answers from the pros. I spend about 4-5 hours each day reading the posts on here and have been doing so for about 2 months. It is my only way to learn this business until I can make some fast cash and order a course or 2.
Oh, by the way, another way to possibly put some fast cash in your pocket is to try Mobile HOmes. Seems to me that they are the easiest to buy low and sell high.
Those are my thoughts on these questions. Hope I have helped in some small way. If not I know there will be others that will help you more and tell me where my thinking is wrong.
Very happy holidays to you (and your Unc)
Woody