JV Opportunity - Fix and Flip North Side Chicago 30% ROI

[Ryan Zomorodi]

Hi BP,

I just put a fix and flip project under contract. Closing is scheduled for June 3, 2019.

Please see deal numbers below and contact me for a full underwriting spreadsheet, BPO, and comps.

The seller is a developer who started rehabbing this property, but ran out of money. We are planning to buy it, finish the rehab, and sell it for top dollar. The project is a full-gut job down to the studs, so almost everything is being re-built. What I love about this project is that the property has already passed rough inspections with the City (a process with can take 4 months or longer), so we can hit the ground running upon closing. Framing, electric, plumbing, HVAC, and roof have already been completed and approved by the city. The property is steps away from a train station in an affluent north side Chicago neighborhood, which allows easy commute to any part of the city without walking very far. We will be working with a general contractor that we've used on 8 similar projects in Chicago. Here's an example of one of those completed projects: https://www.realtor.com/realestateandhomes-detail/4334-N-Ridgeway-Ave_Chicago_IL_60618_M72970-57075#photo10

I'm looking for a JV partner to fund $90,000, which is 15% of the total project cost, in exchange for 50% of net profits to my company, RZ Holdings Inc. I've already secured a senior equity partner (MDI West) to fund 85% of the total project cost for a share of profits.

Here's the breakdown:

$368,000 = Purchase Price

$222,000 = Rehab

$613,335 = Total Investment

$90,156 = RZ Holdings Inc. / JV Capital Partner Investment (15% of total investment)

$523,179 = MDI West Capital Investment (85% of total investment)

8 Months Hold Time

$800,000 = ARV

$142,665 = Total Profit Before Preferred Return

$28,622 = Total Preferred Return (7% Annualized)

$24,328 = MDI West Share of Preferred Return (85%)

$4,293 = RZ Holdings Inc. Share of Preferred Return (15%)

$2,146 =RZ Holdings Inc. Preferred Return Split 50/50 with JV Capital Partner

$2,146 = JV Capital Partner Share of Preferred Return

$114,043 = Total Net Profit After Preferred Return

$57,021 = MDI West Share of Net Profit (50%)

$57,021 = RZ Holdings Inc. Share of Net Profit (50%)

$28,510 = RZ Holdings Inc. Profit Split 50/50 with JV Capital Partner

$28,510 = JV Capital Partner Share of Profit

$81,349 = Total Net Profit to MDI West

15.5% = MDI West Deal ROI

$30,656 = Total Net Profit to JV Capital Partner

34% = JV Capital Partner Deal ROI ($30,656 / $90,000)

I'm available to answer any of your questions. Thanks so much.