All Forum Posts by: J Scott

Quote from @David Wyatt:

What's the general standard split when there is an investor who fronts all the cash for a house flip, and the flipper does all the work?

Thanks-Dave W

 I generally think of it as 50% for the money and 50% for the work. So based on that, 50/50.

Quote from @Account Closed:

Quote from @J Scott:

Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

The seller has a legal address on the contract that is worth around $1,000,000.

He is saying he is almost tapped out, at this point I don't believe much of what he says.

Plus if I don't enforce the contracts when people sign an agreement and break the agreement then I'm out the time and the $100,000+ Profit Margin. In his position I'd sell my car or take a small loan to avoid the foreclosure.

I've only sued for specific performance once -- I was the seller and the buyer didn't show up to closing. 

Ultimately got the judgement, as well as my money.  But, it took about 2 years, and I was out of pocket tens of thousands in legal costs during that time.  And I only got the money because the seller's creditors agreed to pay me off in order to do a cash-for-keys deal.  Otherwise, I likely still wouldn't have been paid.

In retrospect, it wasn't worth the time, effort, or headaches, despite nearly a six-figure collection.

Just my $.02...

Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

Yes, $15,000 to $20,000 for all the paperwork, compliance and regulatory work for a Reg D is about right.

We've been using Mauricio Rauld at Premier Law Group for many years, and have been extremely happy.  A lot of other folks here work with them as well.

For our value add multifamily deals, our LPs typically see between 45% and 50% of their invested capital back in depreciation in year one.

Quote from @Scott Mac:

I wonder if 12% will be enough to weather the storm.

I don't know enough about the properties to answer that question, but note that the original borrower had an 80% LTV loan, so the 12% discount off the original loan amount equates to about 30% off the original purchase price.

Values in Houston have dropped about 20-25% since the purchase, so if this is simply a result of bad operations, the new buyers may have gotten a decent deal.  If the original buyers simply overpaid, that's a bigger problem...

Quote from @Theresa Harris:

I can't see it being inexperience if the borrower was able to get that much money in the first place.  If they had no experience and the bank lent them that much money, then the bank made a bad decision.

 Sadly, it was.  Owners were students of a well known syndication guru who doesn't have the best track record from the perspective of the big lenders.

Quote from @Scott Mac:

Lets see what the assets sell for, and to whom they sell.

 Properties sold to Fundamental Partners for about 12% below foreclosure value.

I've seen a lot of not-so-smart people (and many of them would admit it) do tremendously well in real estate.

The only thing that will determine your success or failure is your willingness to continue putting in the effort until you're successful.  

As long as you resolve to not give up, you will be successful.

Quote from @Adah N.:

@J Scott

Could he be in just as good a position as simply buying a 4,5,6 unit and having 100% ownership? Compared to a syndication where there are multiple owners who split equity ?

Absolutely.  But, generally speaking, if he wants to buy something smaller, he's going to have to bring at least some of his own money and will have to qualify for the loan.  Syndication reduces the amount of money he would need to bring personally, and would also eliminate the need for him to personally qualify for the loan.