Lost, seeking guidance for portfolio expansion...

[Darwin Crawford]

Hi Everyone!

Kind of new to the forum, been reading a LOT over the last couple of days. My post here is for some advice, feedback, criticism, etc on my "next step" in my REI business.

My background is construction, millwork, and operations. I've built all kinds of things, from houses to furniture, to you name it. Construction hacks, budgets, all that, I have dialed in. Did some sales as well, and as best I can tell, am having pretty good luck with REI for the time being.

I live in Scottsdale, and like to invest locally, which isn't without it's difficulties. Most dirt is too expensive for good cap rates, or the condo buildings that work have lousy HOA's, etc.

However - I have 2 condo units in a building which I discovered while riding my bicycle around with the dog. Its a gem from the past, excellent HOA, kind of hidden, and right next to Old Town (the downtown tourist area) and the local hospital. It's block construction, I've made friends with the building maintenance crew, and really, really like the place. It was built in the 60's, by actual craftsmen. I spent a lot of time as a kid with my grandfather, a depression-baby, and incredible maker of things. I learned to look for the best.

Here is the rub: I got started in REI after cutting a deal with family - basically I re-built my recently divorced parent a house for 35% of what the contractor quoted, as they were in a bad situation after a home inspector royally screwed up. It took 8 months, and I lived off ramen noodles and savings, but in exchange, I got bankrolled, and took over the role of "family superintendent".

So right now, I own 4 properties, and manage said parent's house with the help of my crew.  Portfolio is profitable, but needs growing to really be a living.  I don't have demonstrable income other than the RE, which is held in a family trust, but according to my CPA, if he "had any money he'd invest with me"....whatever that means. 

So, cue my search for private money.  Research and google led me here to BP, and I've come seeking ideas for raising capital for these condos.  After running my construction-nerd math, I like the idea of owning 10 of them much more than a 10-unit multi-plex.  Costs are fixed, and predictable, which I like.  

Based on the advice of some people in finance (two family members run a Financial planning office with a partner), I was given the starting suggestion of 1 of 2 things.

1) Partner - they put up money, I run the show.  My "ask" is 25% equity and 50% of net income. 

2) Loans - these units are usually priced in the mid-70's.  I got my last two as distressed for $59K and $67K, and put another 5-6K in them.  They will cashflow well at 20-30yr amort, but not at 15yr.

My tenant base has been a combo of Travel Nurses (I know some folks at the hospital a mile down the road) and AirBnb, and corporate travelers.  

The nut I have been unable to crack from online research is this: where is the middle ground between Hard money and bank money?  I can easily pay 6-8% on a 20-30yr schedule and make this work.  

Thoughts?  What am I missing here?