BETA Business Rundown

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BETA Business Rundown

Mike Lee
Property Manager · Greenville, SC · Member since 2013 · 8 posts · 1 vote

Not sure if this is the right forum, but I wanted to test the interest level of a business idea I have been working on.  

If I was to offer an investment vehicle that guaranteed an agreed upon return which would be backed by Real Estate (SFR), the local Government, and an option for a company buyback if the homeowners didn't pay the agreed amount:

1. would that be something you would be interested in?
2. what percentage would you need to make this worth your time and investment money? Please be realistic. (Yes I understand you can flip/wholesale/yadda a house and make a great return, but what I am referring to here is the infusion of passive money... solo 401k/IRA, investment dollars for yearly cash flows, etc.)
3. Would the option of using your retirement fund (401k, IRA, ...) as an option for funding a deal be appealing?
4. Is an annual term too long?
5.If given the choice at the end of the term, would you prefer to take the house (at which time you could uncloud the title), or would you prefer to have my company buy it back?
6. Would the option of using your retirement fund (401k, IRA, ...) as an option for funding a deal be appealing?
7. Any other items that would add attraction to the deal.

I am already doing well in the real estate development world, but I feel that there is potential in this other option.  I was hoping to do an informal survey group and ANY advice you can offer would be great.

Thanks in advance BP motivators for any and all info!

Mike Lee

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  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 905 votes
    10y

    @Mike Lee, to answer some of these questions we need to understand the concept a little better (need specific on rate of return being offered, etc) and assess the risks/reward.

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  • Mike Lee
    OP
    Property Manager · Greenville, SC · Member since 2013 · 8 posts · 1 vote
    10y

    Thanks @Percy N.  I thought I explained well enough, but I see I may have been a little too ambiguous in my wording.  I'd prefer to limit the amount of info I give on an open forum, as it's a working business model and I'd like to not give away too many trade secrets.

    I have an investment vehicle:
    1. RISK: minimal as it is backed by a deed (home being occupied by and therefore taken care of), and a promise to repurchase the investment.  The risks that may be associated with this investment  are if the company becomes insolvent, but even that risk is marginalized as you still have an actionable deed, purchased at 60-70% of value, to a house that you can foreclose and take full possession.
    2. REWARD: That is one of the questions I am trying to have answered.  What percentage would you expect as an investor that would make you happy with this secured investment with very minimal downside? 

    example:
    If I were to sell you a guaranteed cash flow of $6,000 plus a return of your initial investment, to be paid back within a one-year time frame, how much would you pay me for that cash flow?  ($75k payment now to get $81k in one year = 8% return).  Keeping in mind that this investment is secured by a deed, and a promise by my company to repurchase the total investment back from you if the debtor doesn't pay within the time frame.  Additionally, you could also choose to keep the house with the option of foreclosing on the property and take full possession.

    Does that help in any way?  

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