You said “It’s just killing me that people who couldn’t analyze a deal but have 20% down are investors…A couple my wife knows are looking to rehab a house that WILL GO for 400k there getting it for 300k.”
Who cares? You’re not concerned that someone is making more money than you, with less knowledge, are you? I’ve seen a lot of really stupid people who constantly trip and fall, right into a pot of gold. It amazes me. I only wish I could be that stupid.
If it makes you feel any better, maybe the people with the $300K house that “WILL GO for $400K”, won’t go for $400K. Maybe 10% less, or $360K. Maybe the arse end will fall out of the market altogether while they are rehabbing, and they can only get $340. Maybe they’re mental midgets that over rehab the thing, put in a bunch of crap that they like, and no one else could care about, have $20K in unseen repairs, and have to hold the house for 6 months, or longer, on a hard money loan at 18% and 10 points, and end up loosing $10K. They wouldn’t be the first. Congrads, you’re better off for not having money.
I’ve been pitching the rehab thing to two friends of mine for awhile. They’ve been interested but are now looking on their own at properties. They don’t have any knowledge and come to me for advice on deals they are thinking about.
It just kills me because I have NO CASH. They do…They don’t need me. How do I approach them to cut me in. I was thinking of bringing one of them in to cover my costs for using hardmoney. Then at sale pay thme back with a percentage.
Posted by michaela-ATL on November 06, 2002 at 17:21:44:
mike,
do it on your own. first of all a 3-way split leaves almost nothing, especially on your first rehab.
like js wrote, being partners with friends is a recipe for disaster. don’t get me wrong, some people do well with partners, but i think the majority creates more stress than is good. the first deal will teach so many unexpected lessons, that that would create a major strain on your partnership. you are better off alone.
if i remember correctly it’s you, that had experience in construction, but had no cash and bad credit, right? why don’t you work on your credit right now (i wrote a little post on the financial board. there’re also some great websites, that i’ve been working with myself. debt validation etc). so, if you find a deal, that would allow you to get hard money.
Funny I should see this post today. I have been talking to all my friends for weeks now about what it is I’m doing. Guess what? They’re thinking they might do the same thing.
At a party I attended over the weekend, I had quite a crowd asking detailed questions. It occurred to me that I might not want to go into detail. These people might become my competition. I’ve made it a point to keep my mouth shut about the details of anything I’m on to.
As far as what you should do now, well, I view doing business among friends as a good way to lose friends. I know, it might work out, and everyone will love each other forever, but if it doesn’t? That’s a serious “hard money” loan.
My friends had said to me one time, do a deal or two then maybe I’ll get involved. Yeah right, if I make anything off my first SOLO deal I won’t look back.
It’s just killing me that people who couldn’t analyze a deal but have 20% down are investors. I also not talking about my friends. A couple my wife knows are looking to rehab a house that WILL GO for 400k there getting it for 300k. That’s what their criteria is…I’m really thinking the less you know the better off you are sometimes. Nothing to be afraid of.
Michaela…no not the guy your thinking of. Good credit, good income, no real cash. Also, can’t hang a picture by myself.