Posted by JD on October 03, 2001 at 21:15:10:
The partnership idea seems unnecessarily complicated. I would not even consider it, without him having a really good reason why he doesnt just sell a few, Then rehab the rest.
Partnership I’ve been offered – FREE FIXERS - Posted by Aaron
Posted by Aaron on October 03, 2001 at 14:04:28:
Partnership is 3 people - 45% me, 45% GuyA, 10% GuyB.
Guy A has 10+ SF homes on contracts (many 5-10 yr payoff terms) and has cashflow problems and bad credit. His properties are rehabbers($5-$15k needed) that are either vacant or (if not too bad) have tenants. He has no access to cash but knows he needs to fix up the properties and needs to fix his cashflow probs. He would contribute property to the partnership.
Guy B is a deal-maker and also becoming a mortgage broker. He is involved with all kinds of RE deals w/ other people and he gets 10% for putting GuyA and I together. He may contribute some $ to the partnership if necessary.
I have some cash and access to cash. I have great credit and that’s what they want me to contribute.
The deals we’ve talked about are fixing one of GuyA’s properties (a duplex) he would put into the partnership. It is vacant and need total fix up. He owes $24k on it and after fix-up it would be worth at least $70k (they think $80-$90, but I’m being conservative). A contractor said he can fix it up for $10-$15k and have it “rent ready” in 3 weeks time.
I have read many books and courses and even rehabbed one property myself. I understand much more about REI than I’ve experienced and this sounds like a good deal. What do you all think of this opportunity and how would you go about all this considering that I have limited cash and cash resources and want to maximize what I can do? Would you rehab and sell these fix ups or refi and rent or what? Would you try to buy this guys props for cash and forget the partnership? I’m new to this forum but plan on spending a lot of time here based on the caliber of excellent people and excellent advice I’ve seen posted. Thanks in advance for your help.
Re: Partnership I’ve been offered – FREE FIXERS - Posted by BillW.
Posted by BillW. on October 05, 2001 at 06:27:28:
Aaron,
I didn’t notice where the "FREE’ in this arrangement came into the picture.
I’d need the answers to a few questions before I proceeded.
- Why doesn’t guy A simply sell a few of these and clear out his money problems?
- How much cash will guy B put in?
- Why would you need partners? You’re the one with the credit/cash?
- Who would have controlling interest? If there is a question regarding spending money, especially, who makes the final decisions?
- What relationship does the contractor have to guy A?
I’d proceed very carefuly with this arrangement. I’m the type that doesn’t really see the need for partners. The final answers would depend on the facts relating to these questions.
Something to think about.
BillW.