Investor · Redondo Beach, CA · Member since 2014 · 38 posts · 18 votes
Hello BP,
I live in Los Angeles and own 1 property in Kansas City, which I purchased last year. It's going well so far and I plan to purchase more out of state rentals. However after a few more properties, I soon will run out of my own cash. While talking with others about what I do and why, I have been able to generate a good amount of interest in others partnering with me.
My question is what structure do you suggest I use for the OPM that I raise for out of state SFRs? Joint venture where both the OPM and I are co-owners, and we share in the profits? A lender-borrower structure where I borrow their money and pay them a certain rate of return? Something else?
My goal would be to own as many of the properties as possible, whether by owning it right away or by refinancing it after about 3 years and paying off the investor.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
10y
"My goal would be to own as many of the properties as possible."
That's about as focused as saying, "On my next road trip, my goal is to drive really far."
I buy rental in California all the time. I do what I can to capture the equity, then fix the financing later. One deal in California will beat 5 of your "going well" houses in Kansas every day of the week.
Also, if you're borrowing money from people in California and moving it across state lines AND promising them "a certain rate of return" you've just entered into the securities world and you better talk to a lawyer or you might end up in front of a judge if one of your "going well" deals turns sour and your lender feels like you burned him or her.
Investor · Redondo Beach, CA · Member since 2014 · 38 posts · 18 votes
10y
@Manolo D. Thanks for the reply. What's your experience been with this type of structure? How long do you hold it before refinancing or paying off your investors.
@Aaron Mazzrillo Thanks for the reply but you aren't addressing the topic. It's about OPM structure not about how your deals are better than mine.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
10y
So I guess you just skipped the whole second half of my post;
Also, if you're borrowing money from people in California and moving it across state lines AND promising them "a certain rate of return" you've just entered into the securities world and you better talk to a lawyer or you might end up in front of a judge if one of your "going well" deals turns sour and your lender feels like you burned him or her.
Investor · Monroe , LA · Member since 2016 · 28 posts · 16 votes
9y
@Powell Chee please post an update about which structure you ultimately decided with and how that structure is working out for you. I am asking because I have the same opportunity to invest in real estate using OPM.
Investor · Redondo Beach, CA · Member since 2014 · 38 posts · 18 votes
9y
@Jasmyne M. at this point I decided not to use OPM to invest in SFRs. It's doable but I figure if I'm going to raise OPM, I'm going to do it for larger multifamilies instead.