Posted by brandoncbsre on May 12, 2009 at 11:27:49:
I almost corrected him for ya last night but my laptop battery was about to die!!
Is this fair? - Posted by EJR
Posted by EJR on May 11, 2009 at 12:53:22:
Anyone know where I can find a partner/investor- someone who will basically put up the money to buy homes, I would find them, manage, lease etc⌠do all the leg work. And wed split 50/50 profits. Is this a fair deal I am giving to a potential investor? If so, are there any good websites where I can find them?Thanks!
Re: Is this fair? - Posted by Ben T
Posted by Ben T on May 17, 2009 at 09:55:16:
I got my start years ago with a guy who was the âfinancing partnerâ in
return for 50% of the deal. Good thing I didnât read this thread back
then huh?
A guy who wants to be a passive investor might find your offer
appealing IF you actually have some expertise to offer.
By the way, I think itâs doubtful you will find such an investor on a
âwebsiteâ. Youâll have to go out to find him/her. Probably have to do
some convincing/persuasion. I think youâll find that the question is
not so much the percentage, as it is trust in you and your ability, along
with the issues of whether the deal will throw off sufficient gains to
compensate for the risk taken. Find an answer to these types of
questions, and the percentage may not be the issue you think.
Ben
Re: Is this fair? - Posted by Lee
Posted by Lee on May 14, 2009 at 23:08:37:
I wrote the following text to a very prominent person on this site not long ago.
(Privately, of course)
(the personal info has been deleted in the following text).
April 30, 2009
Hea âŚ,
⌠⌠⌠⌠⌠âŚ
I have a problem that you may be able to help me with.
I know how to find deals but donâ??t have the cash to do them with.
Iâ??ve missed about $50,000 in income in April 2009 alone because of my problem.
My last (2009) credit report score was over 800 but I donâ??t borrow money.
I would be interested in sharing these deals if I could find someone to fund them.
I bought my first property when I was 18, and the second when I was 21, aprox 30 years ago.
My apartments have been fee simple since 1986.
I m willing to provide a recent credit report and background check if the funding person(s) will do the same.
Iâ??m willing to locate and â??tie upâ?? and be the â??agentâ?? to purchase rehab/ repair and sell properties for an investor for an equal share of the net proceeds, fair I think.
$50,000 in income per month is not typical, though potential income may be many times that.
Think you or someone you know would be interested?
Lee
(Personal contact info was included)
Not a peep, no reply!
I guess if they didnât need an extra âcouple of hundred thousandâ a year I would understand. LOL
Fair? ⌠YEP!
Like Dave Ramsey says, RISK is the Factor that most investors donâ??t include in their investment considerations. RISK of them not knowing me recently may have had a large part in them not contacting me.
Or, makes me think⌠maybe the âheavy hittersâ donât have the clout it takes to play.
Looks like Iâ??ll have to choose a few properties to do a 1031 with.
Or better yet, as my son (an accountant) says, sell nowâ?ÂŚ there is no âFederalâ capitol gain tax through the end of this year.
Note to self: Listen to Son!
LOL
Lee
Good luck with it,
youâll need it!
Abilities and expertise⌠- Posted by JT-IN
Posted by JT-IN on May 12, 2009 at 10:45:20:
Those are valuable commodities in the world of RE investing. If you truly brought a boat-load of each to a RE deal, then maybe the proposed offering is equitable. The problem is, as a beginner, you likely have neight abilites or expertise. What is really going to happen here is you are going to O-J-T and experiment with someone elses money.
Being the party with NO money, you essentially are taking NO RISK. Sure, in your mind you might be taking risk, but in reality there is NO RISK to you. If the deal bombs out, how could you repay the investor� Prolly not going to happen, so 100% of the risk belongs to the financial partner.
Here is what I would suggest⌠assuming you had someone that was interested in investing capital. Tell them that you will do the deal for NO FEE. You will perform and 100% of the return belongs to the investor, 0% to you. And if they see value in what you did and decide to share any part of that with you, then great. If not, then great. You should be so sure of your abilities that you will work for free, based on the fact that the investor would be a fool to not take care of you so as to have you cut them out of the next profitable deal⌠If you truly display ability and expertise, then you will be compensated. If not well on the 1st deal, then very well on the 2nd deal⌠once you have a track record, then it is easier to dictate how things should go regarding active and passive partners.
BTW, âtough crowd hereâ, isnât itâŚ? Good luck on it.
JT-IN
Fair? - Posted by Kristine-CA
Posted by Kristine-CA on May 11, 2009 at 22:52:30:
I canât speak to fair. In my family we rarely use that word, unless we
are speaking about pale skin.
But I can tell you this. For several years, from the mid-90s until about
2002, I worked on RE projects as an assistant to two partners who
were the principals. They did no development. Their skill was
knowing how to buy impossible things and make them possible. They
were/are also social activists and philanthropists, and were skilled in
making deals with municipalities and conservancies and charities. I
saw amazing things. I was privy to meetings, plans and some of the
numbers. All the deals were single purchases profitable in the
multiples of millions.
Their âmoney partnersâ all got more than 50%. Sometimes way more. I
was working the working partners: the brains, the talent and
experience. But if someone loans you 8M and you turn it in 16M in
just a few months, the private lenders got the biggest share. No
offense to your skills, but these guys (now retired) brought SO much to
the table. One brought tens of millions. The other brought millions.
Even so, their money people got more.
Just one perspective. Kristine
Re: Is this fair? - Posted by Claude
Posted by Claude on May 11, 2009 at 21:18:04:
Any partnership you form MUST be fair to all. Look at it from another view. WHAT are you doing for your 50%. In mine, and probably Sailorâs view, d@mn little. There are literally hundred of thousands, probably a million agents and brokers who do the leg work nowâŚfor a LOT less than 50%.
Re: Is this fair? - Posted by brandoncbsre
Posted by brandoncbsre on May 11, 2009 at 21:03:45:
Just a little something that I have noticedâŚ
People who donât have money think that poeple with money should be DARN happy making 6-12-15% because âthat is way better than what the bank is payingâ.
People with money made that money by being smarter than the bank.
Go over to the mobile home board here and ask those guys if they would be happy with 25% returns. Theyâll laugh you right out the room.
Keep reading everything you can on this site and youâll start finding ways to earn 1,000+% returns. No I didnt put too many zeros in that.
I have 2 rentals that the bank financed 100% plus the money to rehab. Meaning, I dont have a dime in either one. Figure the return on those houses? The answerâŚInfinite!!
Good Luck to You and stick around here.
Re: Is this fair? - Posted by Sailor
Posted by Sailor on May 11, 2009 at 16:17:36:
Partnership agreements vary, but what you are proposing to do sounds like what my RE agent w/do for 10% of rents. To qualify for 50% I would expect a partner to do extensive rehab & maybe some closing costs.
Tye
Re: Is this fair? - Posted by Jack-E
Posted by Jack-E on May 11, 2009 at 14:43:47:
Good Luck! He who has the money has the power. I doubt if 50/50 will cut it
Re: Is this fair? - Posted by Ben T
Posted by Ben T on May 17, 2009 at 10:00:10:
By the way, youâll also have to figure out an effective way to structure
the deal such that your investor is amply protected. For instance,
doing a partnership deal might expose his money to a risk that a
disagreement between the two of you ties up or loses his money. So
you need to solve those types of questions up front.
Ben
Re: Is this fair? - Posted by Natalie-VA
Posted by Natalie-VA on May 17, 2009 at 07:46:17:
Note to Lee: What is your son talking about in reference to no cap gains this year? Is he referring to the zero percent rate for those in a low tax bracket? If so, doesnât the amount of the gain count toward income? In other words, the amount of your gain could bring you into another tax bracket where the rate is no longer zero. I hope Iâm making sense. Can you clarify?
âNatalie
Re: Is this fair? - Posted by EJR
Posted by EJR on May 11, 2009 at 16:30:37:
Even If im offering the investor a 10-12% return? Plus all the leg work
etcâŚYou dont think someone would do it?
Re: Is this fair? - Posted by EJR
Posted by EJR on May 11, 2009 at 16:32:10:
what If i am offering the investor a 10-12% return? Plus all the leg work
etcâŚYou dont think someone would do it?
Re: Is this fair? - Posted by Sailor
Posted by Sailor on May 11, 2009 at 17:26:27:
Sorry, but I wouldnât cross the street for 10-12%, & you canât guarantee return, anyway.
Tye
Re: Is this fair? - Posted by ejr
Posted by ejr on May 11, 2009 at 17:28:03:
what kind of returns are you getting if 12% is no good??
Re: Is this fair? - Posted by Sailor
Posted by Sailor on May 12, 2009 at 08:13:46:
It depends on the type of investment. If I doing a HML, w/points, I might make up to 23%. If I am buying something to flip, Iâll probably aim for 300%, but settle for 200%. These days, I mostly want income streams, so I donât factor in appreciation (a good thing in this mkt). Since Iâve long since stopped working for a living, the 2nd most important factor in my local investing is whether or not the project improves my community.
Tye
Re: Are you splitting the losses 50/50? - Posted by camgere
Posted by camgere on May 11, 2009 at 21:45:25:
If you are splitting the profits 50/50 and giving the investor 12% then presumably the deal is making 24%. What if a million dollar deal shows up and you leave town to pursue it? No profits, big losses, but hey, half of the profits is zero, so he is getting half the profits. You never said anything about splitting the losses. Gee, maybe you are judgement proof. If you have no physical collateral, are you willing to put up your future employee salary? Are you going to work at Burger King for the next 30 years to pay back the losses with 12% interest as promised? Interesting that people investing other peopleâs money never give a thought to losses.
Re: Is this fair? - Posted by Bill H
Posted by Bill H on May 11, 2009 at 18:46:28:
What Sailor is telling you is the bottom line. Neither would I cross the street for 10-12%. And, as he says you cannot, by law, guarantee the return. Bernie did that and now his cell number has nothing to do with a phone.
Any partnership you form MUST be fair to all. Look at it from another view. WHAT are you doing for your 50%. In mine, and probably Sailorâs view, d@mn little. There are literally hundred of thousands, probably a million agents and brokers who do the leg work nowâŚfor a LOT less than 50%.
All you are doing is finding a propery. TELLING me is is a GOOD deal IN YOUR OPINION and wanting me to take all the financial risk and give you 50% âŚit is NOT goint to happen.
Good Luck,
Bill H
Re: Is this fair? (Bill H.) - Posted by Sailor
Posted by Sailor on May 12, 2009 at 08:14:41:
BTW, Bill, Sailor is a sheâ
Tye