We have an Investor! But, they want to own the property...

[Nate Flickinger]

Hello Community,

We have an investor! Our investor is willing to loan 100% of the price, but wants the property in their name until 20% it is paid off. With  an 8.5% over 30 years note.  I am concerned with how long it could take to get 20% paid off and therefore how long to get the property under a traditional mortgage. 

With that, how would the logistics work on paper? Investor owns the property, but we would would manage it? Could we run the entire operations of a property without having our names anywhere? Getting insurance, hiring a management company, etc.? We have not formed an LLC at this time. But I'm wondering if it would make any sense to do that until we actually had properties/assets to protect?

A further conversation is required with the investor to learn how many properties they are willing to loan on at a time. If it is multiple then part of me feels that the terms are maybe no big deal. In one light it is free money. As long as the numbers on a deal work, we put no money down but get the payout of that >$100/door. Plus, if we can grab 6 deals  we can focus on paying down one property at a time to get it transferred to our ownership.

I am grateful for the opportunity that this investor is providing. I'm just having a tough time wrapping my head around it as a concept. Seems different than most other investor relationships I've heard about.

I would be grateful to hear any thoughts of concerns or delight that you all may have. Also open to other arrangements that we could offer to the investor that will still net them a great reward, but may be easier logistically. If that is possible or even a concern.

Thank you thank you!

Nate Flickinger

SW Virginia Area

[Jay Hinrichs]

Originally posted by @Alex Deacon:

@Nate Flickinger thats not a bad deal. I would welcome an investor partner under those terms. You will need to discuss with an attorney to make sure the paperwork is drafted correctly to protect yourself. Also make sure you are doing the correct accounting with the IRS. It will become a bit cloudy on who gets to write off what and your lender/Investor will need to send you each year the amount of interest you paid so you can legitimately write it off.

 I do a lot of this.. and we as the money get all the write offs the vendor operator gets a strike price and gets anything above that .. its very simple transaction.. and good protection for us the money  since its 100%.. 

you will find that some lenders will make a loan to an LLC that you and the lender owns.. if you default they just kick you out of the LLC... this is what i have been told Do Hard money does in some of their loans that there is little equity protection.. its just a form of foreclosure without having to do a sheriff sale.

although unless you think these properties are going to go up in value to manage and run them to only make 100 a month seems like a lot of work for very little pay .. and probably a loser in the long run for both of you