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Updated almost 3 years ago on . Most recent reply
Newbie long distance investment
I am a newbie investor from Seattle, WA. One of my friends who lives in Nashville found a nee construction house $300k (4 bed 3 bath), and is seeking to invest along with me. What are some of the things I should consider while going into a deal with him? Is this a good strategy to invest along with others? Should there be any paperwork between us so that there are no problems in future? Please advice.
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Investing with a friend or family member is a great way to get in the game, because the biggest barrier to entry to buy and hold real estate is the down payment requirements.
So not a problem going into business with him, but you need to have some LENGTHY talks about expectations to make sure there are no surprises or hurt feelings down the road.
-Who does the tenant call when they have a leaky faucet?
-Who does the tenant pay rent checks to?
-Whose name is the mortgage in?
-How are repairs and maintenance paid when they come up?
-What if property values go up 20% in the next 2 years? What if 1 partner wants to sell, the other wants to hold?
-What happens when a tenant stops paying rent and you need to retain an attorney for eviction?
Put this all on the table and more to make sure you guys are on the same page. Then consult with a local real estate attorney to draft up a partnership agreement that protects you both, and puts all expectations on paper.
(Side note - a new construction house is probably not going to give you much, if any monthly cash flow)