All Forum Posts by: Alex Huang

I've found a great partner to work with in some real estate and we are trying to finalize our Operating Agreement.

While we both expect to be able to amicably part ways in the future, we both understand the importance of having a secured roadmap to dissolving the partnership.

With that said, we are struggling with finalizing the OA, so I was hoping some people here could share their experiences and input on how they dealt with this issue.

Right now, our plan is to have the following three options if a partner opts to exit:

1. Remaining partner can offer a cash buyout, paid out over 2 years.

2. Partners divvy up the properties equally (or as close to equal + cash) to make numbers work. Downside to this is there are some tax implications due to tax basis

3. Full liquidation of partnership

I feel like we've exhausted all of our options, but still are struggling with figuring out the perfect solution. Any one care to share how their agreements are setup for the eventual dissolution? 

Thanks

Curious to hear from those of you who are both flipping and rehab/renting properties as to what sort of price ranges you are targeting for kitchen cabinets?

I haven't had to buy cabinets yet for any of my properties and would appreciate any guidance you could provide on what a good price is for you on white, finished, cabinets?

 Thanks. 

That was kind of the way I was leaning any way, but I wanted to make sure there wasn't some obvious solution that I was over-complicating.

Looking for some advice on the best ways to setup a partnership.

I have an existing LLC which holds some properties that are mine. I've recently worked out an arrangement with some friends to partner on some properties as well (and future properties).

What are the best options in getting both of us protected when it comes to this partnered-property? Should I setup a new entity to have the partnered-property held in? Or is there a way to utilize my existing LLC, but to have a specific carve-out unique to this (and future) partnered-properties?

My goal is to have every one feel secure in the partnership while also avoiding any unnecessary fees like legal, if possible. I figured many of you here have been in the same situation so I'd love to hear how you worked out your arrangements.

Thanks!

I'm currently eyeing a bundle deal of about 10 homes with 13 units. The homes are divided in C+ to B+ areas with stable rent demand, etc.

All of the homes are currently rented out with a mixture of month-to-month leases and long-term leases. 

The asking prices on the package is close to $630,000.

Gross rents among all the properties are about $105,000.

I haven't walked through the properties, so I am not able to assess their indoor condition, however my initial research suggests that some of the buildings are also a little below market rents. 

What are people's experience with these bundle packages, assessing their true opportunity, and things to look for when evaluating these types of deals?

@Jay Hinrichs

Could you share what equity shares are reasonable or 'market rate'?

I've been exploring the idea of helping to procure deals and manage properties for people who are independently wealthy, looking for retirement income, but who don't want the headache of managing or finding properties. They just want the checks. 

I would be interested in helping them find deals that fit their criteria, rehab, and manage their properties with a small piece of the equity on the property as well. My initial thinking was BRRRRing a house (investor puts up 100% of the capital), cashing out their principle via a refinance, and then splitting the net rents + house at something like 70/30. Is there a 'standard' for deal structures like this as far as the ratio?

Thanks for the feedback - especially on the 50/50 split. I was hoping to get some opinions on what a 'market-rate' profit-share would be, so that's a great help!

In the instance of a BRRRR investment, and the owner is able to cashout his principle up-front, would it seem fair that (assuming a 15 year note), I would get the same proportional share on the property once it's free & clear in 15 years or if the house sells?

There was a good lesson by either Josh or Brandon on the podcast regarding price drop. I'm paraphrasing, but the lesson was that it is better to drop your price steep up-front, than to gradually go down by $2.5k-$5.0k increments.

IIRC, the example given was a property listed at $170k. He came down $5k/month and eventually sold the house 8 months later at around $130k. Had he just gone from $170k to $130k originally, then he would have saved on all those holding costs and been able to put that money back to work.

I'm not saying you should drop your property by $40k, but just to weigh the pros/cons of a gradual vs steep drop in price.

Good luck.

@Joe J.

Send me a PM with details. I have some great guys that I can connect you with.

Welcome to the RE streets.

A good property is definitely attainable. It's important to remember a few things:

1. The money you make on real estate is made in the buy of the property. Trust your numbers and don't overspend. 

2. Your pool of properties to buy will depend a lot on what you're looking for. You might have more luck finding some distressed properties, as the added work can deter the more casual investors who don't want to deal with more than just a cosmetic rehab. 

3. Remember to stay objective and unemotional when it comes to buying real estate. Don't feel attached to a property and understand you won't land every deal.

Good luck!