New Investment Opportunity + Feedback

[Jay Williams]

Hey Everyone,

Anyone who follows me knows as a newbie investor I've decided to stop only researching and add some action to my plan. My new borrowed phrase (shout out to @Erin Wincombe) is that I'm committed to crushing it in 2019.

I have a property I just came across and I'm looking for the right partner to invest and some guidance.

It's a 4 plex (2bds, 2bth) in Compton CA in a very low income neighborhood and will need lots of repairs - I'm in the process of estimating how much. I have very little liquidity and will offer to split the deal with an investor. I'll plan to manage the property on the deal in exchange for the capital to get this deal going. It's not listed yet but believe it will list for $580-$600k but obviously will need to be adjusted for repairs. ARV will also be about $600+, rents min. $1300-1500/mon per unit. Let me know what you think! Any advice for structuring the deal? Thinking of using the BRRR strategy however not sure if this makes the most sense. I know that I would be able to refinance but the cost of the loan and the repairs concerns me.

[Don Konipol]

@Jay Williams

Doesn't seem like your plan produces positive cash flow if financed, doesn't produce an attractive ROI if all cash, and doesn't produce any "instant" equity; is in a very rough area with heavy property management going to be required.

The guru set, and some well meaning but unaware investor wannabes offering advice, tell you that passive investors are lining up to provide money for your deals, 50/50 split, etc. This was somewhat true 5 years ago, though usually quite exaggerated. In today’s market passive investors can go online, sit back in their favorite comfortable chair, and research investment offerings from large syndicators, providing professional management, all types of residential and commercial properties, either historical and continual cash flow or value added higher return investment, in growing and or top notch stabilized areas. All offered to provide the passive investors with 100% ownership, with a preferred return before the syndicator is cut in for his profit participation. Now you have to ask realistically, what are you offering that will compete with that?

The smaller investors that are successful attracting passive capital either are able to show a track record of success, or are able to find a money provider who lives in a vacuum and isn’t aware of real estate crowdfunding or who will only invest in situations where his name is on the deed of trust and he personally controls the investment. The truth is that in order to attract this individual the deal would have to be a whole lot better than the one you’ve presented.

I’m not intending to discourage you, but you need to understand the investment and investor marketplace.

Please don’t be mislead by people with no or limited experience giving you an attaboy.