All Forum Posts by: Andrew Perkins

How would you structure a deal with a passive financial partner?

I have someone interested in my passion for real estate education. Although I've only completed one deal and have just one SFH at the moment, they would like to partner up for the next deal and have a combination of cash and stocks of about $150,000 that they are open to investing (Although, they will likely want to start with about $30,000). This person is about 10 years from retirement and likes the idea of having passive income during retirement. My wife and I currently have a remaining $20,000 HELOC available plus about $10,000 cash that we were going to use for our next down payment.

Would you recommend going in half/half with the partner on down payment and charge a property management fee for managing and split the equity?

Would you let the partner put down the majority of the down payment? If so, would you still split equity if you are doing all the work?

This is an interesting opportunity for us to grow a little faster that we previously thought, but I would love some ideas and advice on how to proceed. We are leaning towards small multi-family. What would you do?

@Spencer William Quesenberry

I found biggerpockets in February of this year. I happened to listen to the episode that featured Brandon's "Buy your first or next property in 90 days" webinar and I couldn't quit listening from there. My wife and I closed on our first rental and had it leased in June. We went a little over the 90 days, but it still felt great considering we didn't know anything about REI. We have plans to purchase more and it absolutely wouldn't have happened if it weren't for the podcast and website.

@Denzel Ray

Our current plan is to pay the minimum, which is amortized over 15 years. Our goal, however, is long term. We don't plan on utilizing any rental income until retirement, when both the mortgage and HELOC will have been payed off by the tenants. The end result will hopefully be cash flowing assets that we never actually paid for. We still have enough of our HELOC to make another purchase, but if we want to go beyond that and the current rental cash flow hasn't built enough we may explore paying off the HELOC quicker to re use. The interest rate on the HELOC is still low right now, so if the prime interest rate rises we may also make moves to pay it off. Some HELOCs allow you to transfer your balance to a fixed rate loan once you use it as well.

@David Muscovalley

We recently took out a HELOC against our primary residence. We were allowed to take out up to 75% LTV. We used this for a down payment on our rental property. It was tough to find a deal that would cash flow properly with essentially no money down, but it forced us to find a property below market value. My wife and I also understood the fact that we were putting our primary residence at risk and made sure the deal could pay the mortgage, HELOC, vacancy, cap ex, maintenance, etc, and still cash flow positive.

@Markum King

I recently used EZLandlordForms.com for tenant screening. This is the first time I’ve ever screened tenants, so I don’t have much to compare it to but I thought it worked great. It also allowed me to easily upload the chosen tenant into the lease agreement I drafted on their website.

I probably should've understood the term before I used it, but after doing some research on the classifications, it is most definitely a Class C area.  I still completely understand the concern with both applicants, but does this seem more appropriate for this type of property?

@Jason D.

Current income for candidate 1 is not 3X, but I have verified paperwork from the school district confirming new salary.

I called candidate 2’s current landlord and he verified the tenancy is from 1/19 - 7/19 so a 6 mo lease.

@Kyle J.

It’s possible that I may not be classifying this correctly as class B. I met a handful of the other applicants and decided pretty quickly not to consider them.

We just listed our first rental property and received lots of interest in it. We have narrowed it down to two candidates and I’m having trouble deciding which one is more qualified. This single family home is in a class B neighborhood with home values averaging around $95,000. I get a good feeling from both of them having met them and showed them the house. Here are the two candidates info:

Candidate 1-

- Maintenance Technician for over a year

- Makes slightly over 3X rule

- Foreclosure and auto loan default in 2013 when going through a divorce

- Lived back at home for a few years, then started renting again. 6 mo. of verified tenancy. Wants to move closer to children.

- Has 3 kids who spend weekends with him, but had listed no child support payments

Candidate 2 -

- Teacher, starting career in August - 4 years of previous employment history as bartender.

- makes slightly over 3X rule

- auto loan default in 2017

- 4 years of verified tenancy while in college

- 2 small dogs

Any advice would be much appreciated!

@Larry T.

I appreciate your reply. It is definitely not a high end rental. I was just worried about it looking bad that the fridge clearly has the capability but doesn’t work. I didn’t even think about the future repair/damage aspect. Definitely doesn’t sound worth it.

Thank you