Finally got a funding partner

Finally got a funding partner

Wholesaler · East, TX · Member since 2012 · 88 posts · 61 votes

Hey guys,

I just wanted to share a success story with you. I've been doing real estate on my own (wholesaling, buying no money down, etc.) I found a deal in my area and I advertised it at my local crossfit gym. (for those of you who don't know, crossfit is AWESOME and it's expensive. Since it's expensive, you will find very wealthy people going there.) I offered the owners $ if one of the members bit, so they were up for it. One of the physicians who works out there contacted me about the property. We met, I showed him how protected his money would be if something went wrong, and we went to look at the house. He committed and now he's funding 100% of the purchase price and rehab for 50% of the profit at the end. By my calculations we should both we walking away with about 17K after it's said and done. It took me 2 years, but I finally have someone with deep pockets who is interested in funding me. I'll leave you with this...it's something my dad taught me when I was in high school and I kept it in my wallet for years:

He who has a thing to sell

and goes and whispers in a well

is not as apt to find the dollars

as he who climbs the tree and hollers.

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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
12y

Not sure why Joe thinks this physician is crazy, sounds like his return may be outstanding and security position strong so I congratulate you on your recent success. Can you share how much the total investment will be?

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  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    How do I get hold of this physician I have a few deals that I need 100% funding for, and I want to talk to him before he wakes up? It is good he is doing 100% are your recorder the deed in his name as the lien holder.



    Joe Gore

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    12y

    Not sure why Joe thinks this physician is crazy, sounds like his return may be outstanding and security position strong so I congratulate you on your recent success. Can you share how much the total investment will be?

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    12y

    Here is so more food for thought: 50% of something is better than 100% of nothing.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Will Barnard,

    I should have said is his funds protected by a security position.



    Joe Gore

  • Wholesaler · East, TX · Member since 2012 · 88 posts · 61 votes
    12y

    Total investment will be 82K for purchase and rehab. He has a lien on the property at 92K so he is guaranteed 10K out of the deal. I will take the next 10K and we split whatever is left over. I'm ball parking the sales price at around 120K. I set this up to protect him as much as possible. A lot of this is based on trust, since we have a personal relationship beyond the business relationship. We aren't buddies, but we see each other regularly at the gym.

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @Thomas Mitchell Congratulations, and very creative thinking too! As for your dads saying, I'm stealing that! :)

    @Will Barnard I totally agree! That's my feeling too, a piece of the pie is better than no pie at all. Or ... if you can get enough streams, soon you'll have a river!

  • Flipper/Rehabber · West Hartford, CT · Member since 2013 · 128 posts · 52 votes
    12y
    Absolutely right, Will Barnard ll. 50% of something IS better than 100% of nothing. Congratulations Thomas Mitchell ! Do you mind sharing with us how you showed your investor how his money will be secured? BTW- I'm being introduced to a PL who's interested in investing in RE with the expectation of lending 100% purchase and rehab with the return of 8-10% on his investment. My point being- it is possible! Good luck!
  • Wholesaler · East, TX · Member since 2012 · 88 posts · 61 votes
    12y

    @Taylor Shapiro , basically I showed him how that if let's say, god forbid, I died in a plane crash the day after closing, all he has to do is call a lawyer, pay $1,000, and he can foreclose on the property in 30 days. (Texas is fast) Then he's got a house instead of a lien. I also increased the lien for 10K more than what he's putting down, so he gets his money first when it sells. If we have to drop the price on the house I KNOW it will sell for 100K. He'll get his 10K and I'll get nothing. I'm also purchasing it in my name so he has no liability on it. We're getting a mortgagee title policy so he's covered if he has to foreclose for some reason. If anyone knows of any other way I can protect him, please let me know.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y
    I think everyone would come out on top as long as you are going through a title company and list him as the lien holder.

    Joe Gore
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    12y
    Originally posted by @Account Closed:

    I should have said is his funds protected by a security position.

    That makes more sense Joe. I saw nothing in the OG post to suggest otherwise so it was simply assumed to be the case and it has since been clarified that a recorded lien will be in place.

    Looks like you have protected your lender/investor and I would add that you should make sure he is added as additionally insured on the hazard insurance policy. Nice work. At the $10k, the investor earns just over 12% on his money and at the $17k expected profit each, he gets just over 20%.

    Out of curiosity, does the all in of $82k include holding costs like taxes, insurance, utilities, lawn care, etc? If not, make sure you estimate all of that to confirm there really is a chance to net $34k on this deal.

    If you can continue to find deals at or around the 65%-70% all in mark on homes with exits around $100k, you are going to make lots of money for you and your investors. I would be all over those deals.

  • Douglas LarsonPro Member
    Rental Property Investor · Salt Lake City, UT · Member since 2008 · 410 posts · 337 votes
    12y

    @Thomas Mitchell

    Great Stuff! Let that be a lesson to all of us!... "Climb the tree and holler!"

    . . . . and it sure helps to holler from the right tree!

  • Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    12y
    Originally posted by @Thomas Mitchell:
    A lot of this is based on trust, since we have a personal relationship beyond the business relationship. We aren't buddies, but we see each other regularly at the gym.

    This is the real reason for your deal, Thomas. It was done privately, quietly, and over time. Though appealing, the terms and numbers had nothing to do with it.

    These are the best business relationships. Take care of this guy.

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

    Congratulations! An important strategic partner to have! And maybe just the first of many!.

    @Will Barnard , I like your quote about 50% of something rather than 100% of nothing.. Reminds me of "shark tank" and talking about growing a business with equity injections... I'd rather have 25% of a pie factory, rather than 100% of my own pie.. lol

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