Posted by John Merchant on August 03, 2011 at 22:05:06:
While it sounds great and many of us have succumbed to temptation
and done deals using $$ from several investors on a single deal, it’s
a securities law no-no and I’ve known a number of very smart REIs
who’ve been slammed hard by state Secs Agency penalties and fines
for their efforts.
I’d recommend that you use one REI-game partner at a time, using
his lawyer to write up the deal as that isn’t really a (illegal partial
interest) securitization that’d get you into hot water with the state.
Having listened to some inflexible state sec agency minion-lawyer
more than once expound on the illegalities of such (in their exalted
opinion) I can tell you that IS their rigid position and you & I don’t
want to be in their cross-hairs.
So I have an issue were a lot of people
want $1000 for Ernest money to even
consider a contract. and paying for an
inspection on top of that would cost me
about $300 more, and I don’t have that
kind of money as someone just starting
out.
This is my biggest fear of moving
forward is if someone does say yes I
couldn’t afford to do the inspection.
anyone have any suggestions
Re: haveing truble using opm - Posted by dell-ohio
Posted by dell-ohio on August 03, 2011 at 22:42:54:
I am not sure what your plan is if you find a deal, wholesale, rehab, or other?
when I started and the safest way I know is to find a partner with money, split profits, you find the deal and do the work, he funds the deal. Your risk is at a minimum but you wont be totally stressed out if you need a few hundred or a few thousand if something goes wrong as it will.
You dont make as much money right away but it gives you an opportunity to prove yourself, and if ou do well you start negotiating better terms until you have enough money where you dont need a partner anymore.
Re: haveing truble using opm - Posted by Bill Jacobsen
Posted by Bill Jacobsen on August 03, 2011 at 12:15:44:
In my humble opinion you simply don’t have enough capital to be starting. I believe you start investing after you have a secure income, and have built up some money for emergencies.
Real estate is a good investment in terms of potential return but as we have seen, the return is variable and can even be negative. People with a 30%-40% position have lost 100% of their money in the last few years. It is probable that if you put less than 5% into a property that you will lose 100%.
It sounds like you are only about $300 short. You could use a credit card. Your job should be throwing off at least that much per month for you to consider investing.
My rule is that if I am buying income producing property, I want the net operating income to be at least twice the cost of debt service. That protects me in case of wrong estimates, reduction in revenue or an increase in expenditures.
My first use of a partner was a family member. They were willing to take only 2% plus 25% of the profit. This was even an unsecured position. Other investors did not want to take a chance on someone just starting out.
My advise is to take it a little slower, build up some cash, then invest. Again, just one person’s opinion.