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Updated over 2 years ago, 06/13/2022
Partnership in the near future (roughly a year timeline possibly)
Hello all,
My name is Chris Williams, and I am new to real estate investing. I am 22 years old and haven't purchased my first real estate property just yet. With my current situation as a full time student athlete, I don't have the time to work a full-time job and my debt to income ratio is very lobsided with student loans. I understand that with real estate that it doesn't have to be a one person type thing. I am looking to do a partnership in the future.
Some basic terms of the partnership:
1. I take on the risk of the mortgage and the partner would cover the down payment and closing costs
2. We would split monthly cash flow 50/50
3. We would also split profit/loss 50/50 in the event that we sell the profit
4. I would find the property manager unless my partner has a good connection
I understand that with the price range that I am looking at being $165-200k the cash flow won't be crazy high more than likely, but this partnership would allow me to get my foot in the door.
Feel free to reach out to me via connect request and I would be thrilled to talk some specifics that aren't listed in this post.
Hi @Account Closed, in your scenario, if you have a significant down payment saved up (20%+), you could do a DSCR loan.
That qualifies you based on the income generated by the property. Not your personal income.
If you do not have that, a partnership would be the best route. You could currently do a partnership with the terms you proposed with a DSCR loan. You do not have to wait until your DTI improves.
The biggest issue that I see is that you are not bringing much value to the capital partner. You are taking on the mortgage but they are likely not going to buy something with the intention of defaulting.
Typically these partners find the deal, perform some sort of value-add, and manage the deal. Are you doing any of these or some sort of valuable service?
If not, it will be tough to find a partnership.
Hope this helps! Let me know if I can be of any assistance.
@Andrew Garcia I haven't ever heard of a DSCR loan before. I will look into that for sure. Value-add would be a rehab? I haven't heard that term yet. I have some property managers that I would have manage the deal. The reason I mention the mortgage is because then I would still have some skin in the game. I don't have any intentions on defaulting because I would have at least 6 months of reserves in PITI.
Hey Chris - What you're looking for is wise, I wish I'd started at 22. I think Andrew makes some good points. I've seen this work successfully when someone finds a good off-market deal, gets the info together and then presents it to a partner as a solid investment opportunity. I was in that boat with my father-in-law early on - found a solid property through calling around and he loved the deal, he wasn't super interested when I was presenting the case without the deal.
@Andy Grizzell I like Andrew's thinking as well. It is always good to hear a different side of things. I have access to off market deals with the people in my circle and also some pretty low cost turnkeys and ready to rents. I understand what you mean by finding a deal and then a partner. I have been playing around with the rental property calculator and my agent is finding rents on a few properties right now, so I can have an accurate income to put in. Would you be open to connecting? I can send a connection request. If not, I completely understand.
Love that you are thinking about this at 22 years old. Wishing you great connections and opportunities in your journey!
- Tiamo Wright
- [email protected]
@Tiamo Wright thanks a lot for the encouragement! I will send you a connection request if that is ok. I can never know too many people.
Quote from @Account Closed:
@Andy Grizzell I like Andrew's thinking as well. It is always good to hear a different side of things. I have access to off market deals with the people in my circle and also some pretty low cost turnkeys and ready to rents. I understand what you mean by finding a deal and then a partner. I have been playing around with the rental property calculator and my agent is finding rents on a few properties right now, so I can have an accurate income to put in. Would you be open to connecting? I can send a connection request. If not, I completely understand.
Of Course
Quote from @Account Closed:
@Andrew Garcia I haven't ever heard of a DSCR loan before. I will look into that for sure. Value-add would be a rehab? I haven't heard that term yet. I have some property managers that I would have manage the deal. The reason I mention the mortgage is because then I would still have some skin in the game. I don't have any intentions on defaulting because I would have at least 6 months of reserves in PITI.
Yes, a value-add is rehab or managing the contractors or something similar.
A great way to start is wholesaling. That will allow you to build relationships with investors in your community and make some money while doing it.
Then, once you have experience finding good off-market deals. You can go to an experienced investor in your area and pitch them on the idea of either flipping or BRRRRing the deal.
Pretty soon, you will have a portfolio.
That is just one way of doing things.
Feel free to reach out with any questions on DSCR loans. Happy to help.