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Updated 9 months ago on . Most recent reply

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Gabriel Oquendo
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How to use OPM

Gabriel Oquendo
Posted

Hey everyone! I've found a partner who's willing to finance a short-term while I will be in charge of operations. Considering we haven't locked down a market yet (debating between Shenandoah or Blue Ridge) would it make more sense to put a set amount in an account for the down payment or bring them a deal first? Any advice on how to use OPM or thoughts on the Shenandoah or Blue Ridge markets would be greatly appreciated!   

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Andrew Steffens
#4 Short-Term & Vacation Rental Discussions Contributor
  • Tampa, FL
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Andrew Steffens
#4 Short-Term & Vacation Rental Discussions Contributor
  • Tampa, FL
Replied
Quote from @Gabriel Oquendo:
Quote from @Andrew Steffens:

I agree with John about settling on a property and running the numbers.

However, if it were me once the market and property were identified I would form an LLC with an operating agreement that states what each members contribution and responsibilities are. I would then get an EIN and a bank account and transfer the funds in order to close on the property and then use as an operating account for the income and expenses so everything can be tracked.

I have done deals in a similar fashion as a partnership.  There are other ways to do it, but this way is easy.  If you both qualify for traditional financing you could do an operating agreement/joint venture agreement and open joint accounts in a similar fashion.


 We both qualify for traditional financing. Would it matter if they qualify for significantly more then me? 


 I do not think so, I think the mortgage broker will combine your qualifications into a one application and give you an approval based on that.  From there you can calculate approximate cash contribution from money partner and outline your responsibilities as the operating partner into an operating agreement or joint venture agreement. Example:

Mortgage approval up to $600k

20% down payment = $120k

Closing costs = approx 1.5% $18,000

Furniture costs approx $30,000 based on $20 per footv at 1500 sqft home

Money partner agrees to contribute all necessary cash approx $168,000 to purchase and set up STR. Operating partner agrees to operate manage property (includes marketing, housekeeping ops, maintenence, accounting, etc etc).

Open joint bank account.  

Very simplified version but I hope it paints a picture.  Good luck!

  • Andrew Steffens
  • [email protected]
  • 813-563-0877
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