Seeking Investor who desires proven 10% passive returns

Seeking Investor who desires proven 10% passive returns

Involved In Real Estate · Santa Rosa, CA · Member since 2008 · 16 posts · 6 votes

I am currently looking for 1 to 2 additional investors who would like to achieve a minimum of 10% passive returns for their money in 2014.

I'm not a newbie, been in the business since 2000 and have a proven track record that I'll be glad to share.

My focus is two fold. I target cash flow multifamily and apartments in need of repositioning in Northern CA and I also reposition (flip) houses.

Basically, Long Term Cash Flows and Short Term Flips . . . it ain't rocket science ; )

My 2013 results are:

Flips generated an average 66% annualized return while

the MFRs generated a solid 10% investor return along with achieving large appreciation through buying off market.

Investors are secured with a 1st lien position and additional measures to make sure they are protected.

2 examples of real deals this year are as follows: (please excuse the simplicity as I'm leaving out carrying costs but the max hold time is usually 90 days)

House A

Purchased $350,000

Closing Costs $1,343

Taxes/Insurance $2,150

Repairs/Remodeling $116,230

Permits/Additional Structure $13,420

Commissions (-5%)

Sales price $665,000

Total profit of $148,607 (Total Investor Return is based on cash invested along with 50% of the Net Profit) In this case, it was around $80,603.

Fourplex A

Purchased $341,000

Rents at purchase $3,200

Closing Costs $1,400

Taxes/Insurance $342/mo

Prop Mgmt $300/mo

Maintenance $150/mo

Utilities $330/mo

Repairs $16,000

NEW Rents at $5,000/mo

Total Investment = $359,400

Total value based on comps and income= $515,000

Equity created = $155,600

Investor Returns- (6% on money invested) $1,707.15

(50% of Net Income) $1,048 = Total of $2,755/mo

$2,755/mo = $33,061/yr and a Cash on Cash Return of 9.6% annualized with zero leverage as well as $77,800 in instant equity. Once I refinance this property (in the process now), the cash on cash will of course increase dramatically.

These are not projects I looked at or found online, they are projects I dug up through my contacts locally/nationally and found here in Northern CA that made my investor a substantial amount of money.

I have been fortunate enough to have 1 investor for most of my investing career but am opening up the possibility of working with 1 or 2 new investors for the first time. My current investor is not able to proceed with the rate I am finding/funding deals but is a partner on my multi family cash flows, a big fan of mine and will be glad to get on the phone with you to talk about working with me if decide its something of interest.

I'm very easy to work with but have never desired having tons of investors. I enjoy establishing solid trust based relationships with good people and making them large amounts of money (along with creating a good life for my family and I).

Of course, past projects are not a guarantee of future results and this is not a solicitation of any kind.

Again, sorry for the simplistic P&L, I have detailed analysis at my office which I will email if interested.

This is my first post on BPs and I hope I'm doing it right.

Thanks for your time in reading this and Here's to a Very Profitable 2014!

Best,

Adam.

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
12y

Adam,

First, welcome to BP!

Good post...a lot of people seeking money here will be sparse with details and then hesitant to answer the questions posted. You offered many of the details a potential lender would be looking for and seem to be very open to scrutiny of your borrowing/partnering model.

In fact, your model is pretty close to one I've used in the past (equity position with a minimum interest-based return), and the lenders I've used it with have been very happy with the results.

My biggest recommendation is to start participating in the forums and networking with others here on BP. You'll find that as you participate, you'll build a reputation here, and plenty of investors/lenders will be fighting over you.

See this reply in the discussion

8 Replies

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  • Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    12y

    @Adam Menconi

    Welcome. Great to see you building the legacy.

    Check out the Start Here page http://www.biggerpockets.com/starthere

    Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals, rehabbers (cash buyers) and private money sources.

    You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

    Good Luck

    Paul

  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    @Adam Menconi ,

    I'm doing my own investing in the Bay, so can't offer you any funds now. But just for clarification, I'm unclear if you're looking for equity or debt partners? I saw the first lien, implying a loan (with 10% interest?). But your edit makes it sounds like the return is variable, like equity..? Or some hybrid/kicker?

    I might be more specific about what exactly it is you are offering / looking for..

  • Involved In Real Estate · Santa Rosa, CA · Member since 2008 · 16 posts · 6 votes
    12y

    @paultimmons

    Thank you for the response.

    I've been so involved in the deal side for so long, I can't remember the last time I attended an REIA meeting but agree that it could be time to do so.

    I do like student housing but my niche for multifamily is more geographically specific to where I live. If I go out of state, which I am contemplating, I have heard that if done right, student housing is a great niche to have.

    Thanks again.

    Adam.

  • Involved In Real Estate · Santa Rosa, CA · Member since 2008 · 16 posts · 6 votes
    12y

    @jmartin

    Thank you for the recommendation.

    To clarify, what I will normally do is look for equity partnerships whereby an investor can get a bare minimum 8% preferred return and secure the property with 1st trust deed at 6%. I don't get any money until they make money. If I'm wrong on a property, I have my own funds to pay the investor back or (as happened in 2005 when the market crashed, I worked for a year at no cost to get my investor back his money).

    I can see why what I said can be confusing. I only use the debt as security but its not just a debt position, its also a 50% equity position in the Net Profit. They can be involved in the process if they like, but I've been running construction crews for years and have my team ready to go.

    If I can simplify it, an investor gets

    1. 1st trust deed at 6% to secure the property

    2. 50% of the Net Profit on sale + the accrued 6% for the 2-4 months of hold time

    3. The least they would get is an 8% return, meaning that if a deal ever went bad and the total profit was 9%, the investor would get his 8% before the additional profit 1% is split. Not a good deal for me (and you can't make every deal a home run) but its an opportunity to show an investor that I follow through. I've been in that situation before (in 2005) and that old rule still applies to real estate . . .

    the RIGHT thing and the HARD thing are usually the SAME thing.

    My current investor can vouch for this as well.

    Hope that clarifies it a bit.

    Thanks again.

    Adam.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Adam,

    First, welcome to BP!

    Good post...a lot of people seeking money here will be sparse with details and then hesitant to answer the questions posted. You offered many of the details a potential lender would be looking for and seem to be very open to scrutiny of your borrowing/partnering model.

    In fact, your model is pretty close to one I've used in the past (equity position with a minimum interest-based return), and the lenders I've used it with have been very happy with the results.

    My biggest recommendation is to start participating in the forums and networking with others here on BP. You'll find that as you participate, you'll build a reputation here, and plenty of investors/lenders will be fighting over you.

  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    12y

    @Adam Menconi , great to see a PROFESSIONAL investor post in the marketplace. Unlike most of the wishful thinking, unrealistic expectations and inexperienced posters, your post is not only very detailed, but also offers what appears to be an attractive opportunity for passive real estate investment.

    I am quite sure you will receive some very qualified contacts through BP.

    Private Mortgage Financing Partners, LLC
  • Involved In Real Estate · Santa Rosa, CA · Member since 2008 · 16 posts · 6 votes
    12y

    @jscott

    Thanks for the recommendation and the comments.

    I will be doing just that.

    Thanks again.

  • Involved In Real Estate · Santa Rosa, CA · Member since 2008 · 16 posts · 6 votes
    12y

    @donkonipol

    Thank you for the kind words.

    Although I'm a professional at my business, I've obviously new to the site so I'm still learning. Am very impressed by the responses, encouragement, etc that I've received very quickly on a Sunday afternoon.

    Am excited about continuing to participate on the site.

    Thanks again.

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