Young and Dumb

[Clayton Miller]

I am a 25 year old single working home owner. I graduated with a degree in economics. My roommate and I started a rehabbing business and started working together 3 months ago. We have a small amount of capital $8,000 expendable combined. We both make about $45,000/year. We want to get into the low to no money down flipping business and do a few flips before we begin to hold. At the end of 2017 I would like to own our first rental. Within 3 years I would like to have 5 and within 6 years have 10. The ultimate goal is to put 50 rentals in our LLC, pay them off with flips, and retire with passive income.

I have several wealthy friends who would work with me but I do not know how to structure a deal properly.  Looking for advice on getting this thing going.  

We are both full of energy and ready to put the hours in.  

Thank you in advance,

Clayton

[Jonathan Makovsky]

@Clayton Miller welcome and you sound very motivated!

There are so many ways to structure a deal: 

First find out what your investors are looking for. Do they want to be debt (a lender) or equity (a partner)? Debt is safer, but equity will [hopefully] provide more upside. You might get some investors that want to be debt and some want to be equity. In both scenarios find out what returns will make them happy with the deal (some of it is going to be hard to really find out without a deal in place, yet it's probably hard to find a deal without the money in place - so you're caught with the chicken-and-egg conundrum.) 

Once you find out what return they are looking for and how much money they will [hopefully and actually] invest, then you can see what the total return is and how much you will make on the deal after you put the numbers together.

The best advice I could give is to gain experience, and that's how you get out of the chicken-and-egg juggernaut. So with that said - and you may not want to hear it - is just get your first deal done with two criteria: 1) Make sure your investors make money and 2) they are happy with your style. If those go well and you make any money on your first deal chalk it up to a bonus, but you got the hardest part out of the way: the experience!

Best of luck and I know it's tough being a newbie, but once you get rolling it gets a whole lot easier.