Realtor, General Contractor, and Developer 路 Redding, CA 路 Member since 2009 路 7k+ posts 路 4k+ votes
10y
@Scyrus Cartwright That's a tough question to answer. How well do you know your boss? What kind of experience do you have in real estate, etc.? Those types of situations can be tough. What happens if everything goes south? Is it worth it to lose your job or relationship with your boss over?
Realtor, General Contractor, and Developer 路 Redding, CA 路 Member since 2009 路 7k+ posts 路 4k+ votes
10y
@Scyrus Cartwright That's a tough question to answer. How well do you know your boss? What kind of experience do you have in real estate, etc.? Those types of situations can be tough. What happens if everything goes south? Is it worth it to lose your job or relationship with your boss over?
Hospitality 路 Houston, TX 路 Member since 2015 路 14 posts 路 2 votes
10y
Those are valid questions @Karen Margrave. I don't know my boss that well, however after having some small talk with him he is the one who offered, at 22% interest. I know that is a really high interest rate. I don't have much experience with real estate, but I need to get into it some how. Would there be some way that I can add within the contract where he can have the property if it all goes south. I believe with the right numbers and education from @Bigger Pockets it will make a great investment. I doubt I'd lose my job over something that doesn't pertain to my job. I believe he would be a great investment partner.
This sounds like a disaster waiting to happen. Excessively prohibitive interest rate from boss who has direct control over your W2 job. Newbie real estate investor who is anxious for some experience and doesn't fear foreclosure. Not sure who to root for in this cage-match ;)
Jacksonville, FL 路 Member since 2015 路 280 posts 路 53 votes
10y
I would not consider 22% to be excessive at all. I started a business with a combination of monies from credit cards 馃挸 & loans from friends. The interest rate to friends was 35%.
I needed to get going and the options were: Do it at 35% or not do it at all. In another post I read earlier, one Turnkey provider offered to help a newbie from VA. The offer was: He would purchase the property set $25k, sell it to the newbie at $40k. I think that's 170%.
If you need to see the post let me know. Experienced investors are there saying if he needs to get started, there is his offer. The most important thing is to get started. Di good due diligence first I'd course. Make sure you're not kidding yourself on I'd it's a good deal or not. Certainly though, getting you're get wet at 22% I consider to be cheap.
Next deal or few deals you can opt for cheaper financing. I'd this is your only option, do not hesitate. My post here is about the interest rate, not about the quandary of how it may affect your job status. However, taking risks is what winners do.
Investor 路 Schaumburg, IL 路 Member since 2015 路 44 posts 路 16 votes
10y
When it comes down to private money from your warm market, it all depends on how well they trust your character.
I do awesome work for my boss and he knows I'm good with managing projects. Proving myself to be an essential asset to his company in the last 4 years also didn't hurt. So even though I had no previous experience with real estate, he was willing to give me a 50k line of credit with 0% interest to use toward investing. This has gotta be a rare case though. My boss happen to also have great character and genuinely want me to be successful.
22% sounds greedy, but I'm sure there are deals you can make it work. On the other hand, if your competition is using much cheaper money (hard money at 12%~18%, private at 6~8%), how do you plan to stay competitive? Your offer will always be higher than the others and therefore limiting the types of deals you can do.
An easier thing to do would be to keep talking to more people and seek out more potential lenders. Plenty of people out there got their money locked inside a 401k or IRA losing money this year. Position yourself in the negotiation as investor creating a win-win, not as someone desperate to take any loan offered.