Company to purchase SFRs?

[Jacob Hollister]

Howdy!

My goal is to purchase a house in College Station, Texas with 3 other recent grads and rent out to college students. My question is, what are a couple first steps I would need to begin working towards my goal?

I was thinking step 1 would be to start developing a business plan. This will help us define how the business would initially work and evolve. Having a completed business plan will be helpful to present to the bank when we ask for a loan to buy the first rental house.

Is there a template business plan for this kind of company? Would a 25 page business plan be too lengthy?

Step 2 would be to create the company. I haven't done enough research yet to know much about this step. I thought it was necessary to form a company because I have 3 friends working with me, is that not the case? What kind of company should it be? A Partnership? LLC?

Thanks for your time! I joined BP yesterday and I'm loving all the resources and community.

-Jacob Hollister

[Eric Tait]

Hey Jacob,

In Houston there are hard money lenders that will lend you up to 70% of the ARV (after repaired value) of the house and then lend you a 75% LTV fannie mae loan as your long term financing. It is possible to have less than 10% out of pocket in doing a transaction like this if you are able to identify a property that is undervalued and needs rehab work.

We have completed 7 of these transactions here in Houston over the last 12-18 months.