All Forum Posts by: Alex Huang

 Hey Ed:

PM me details. I have a team with decades of experience with both commercial and residential.

Alex

In case you are a visual learner -- you might want to check out YouTube as well.

Here's a good list to get you started there: https://www.youtube.com/results?search_query=mortgage+101

I'm curious to hear people's thoughts on an arrangement for some potential partnerships.

I have a number of personal friends who are independently wealthy and who have expressed interest in working together. They are looking for opportunities to generate cashflow post-retirement, etc. I've been thinking of creative ways to partner up as I think it's a great way to accelerate growth in my RE portfolio. I wanted some feedback on this structure:

1. Friend puts up all the capital to purchase a house (SFR or MFR)

2. I do the rest: find the properties, rehab, rent them out, etc

3. We BRRRR the properties (or hold them free & clear, depending on investor's preference), return the invested capital and split any excess in the refi 50/50. Profits moving forward are split 50/50 in perpetuity.

4. We would create separate LLCs with each person and hold the properties in the name of the LLC. Operating Agmts etc would also be fleshed out to ensure everyone is secured.

I know terms are all negotiable, but I'm looking for feedback on the 50/50 split and whether that seems reasonable / consistent with other deals you all have done?

Just used Sherwin Williams "Alpaca" and loved the way it turned out.

If I'm reading right, you're at about a 20% COC. Nothing unimpressive about that!

I wouldn't worry about the floor. It's probably something that you would have had to replace within 1-3 years, or atleast until the next turnover, so you just addressed it early and spared the trouble down the road. In the grand scheme of things it's small potatoes.

It's also something that isn't worth your effort to worry about now. Take that energy and use it to find another great deal or use it to keep being such an awesome person / mom / wife. Congrats.

I've actually thought about this type of a structure before but realized a few potential issues arrangements like these that made me look elsewhere.

Seller wants to list their house for $500k. It's in fine shape but outdated and not fully renovated or modernized.

You step in and offer to rehab the house. Let's say you put $50k in rehab and the house sells for $625k

Your share should be your percentage of 625k - 500k - rehab costs  - selling costs. However, the problem is that their $500k estimate might not have been unrealistic. Perhaps, due to the state of their house, the price of their non-renovated home on the market would only bear $460k even though they insist on listing it at $500k. Getting the home owners to agree to that reality could get very contentious and not worth the trouble.

Another problem I foresee happening is how much freedom you would have in the rehab. Maybe you think one backsplash would work better than the homeowner's preference or a modified kitchen layout would improve resale value. Ultimately, it's their house and you could encounter a lot of conflicts when it comes to demo, stylistic choices, etc.

With five years of experience under your belt, it seems feasible that you could raise private money quite easily to buy some properties with cash. Go out and look for one-year loans at 8-10%. BRRRR the properties and pay back the loans + interest after you refinance.

@Heather O. Firstly - I'm very sorry to hear you have to go through with this. It's every landlord's nightmare.

I can share with you what I just paid a painter here in Ohio. I'd consider him to be about average rate-wise. He's a one man crew and he did this job in about 2 weeks.

1,300 sq ft, 4/2 Single-Family Home. He primed / painted all the walls + ceiling, doors (8 doors + 3 accordion closet doors), painted the base boards, and all of the trim.

$2,200 for the walls + ceiling

$750 in materials

$250 baseboards

$1,000 doors + trim

$4,200 total

Hope this helps and best of luck.

Are the old cabinets salvageable?

I took the old cabinets from my rental and just had them relaminated. You can relaminate them in any color you want (or texture) and they turned out great. Altogether, I got new doors and hardware on the cabinets and laminated the existing ones for $1,700 with labor.

I think it would help to look at private money as not the act of 'taking.' You're providing an alternative investment vehicle for people. You're helping them to make money as well as helping yourself in your pursuits. It's a win-win arrangement.