All Forum Posts by: Brooks F.

@Dave Passey thanks. Your response makes me think that I'm just over thinking things, looking for the "right way" to do something when there may not be a "right way". As long as everyone is happy with what we work out, we can be creative. 

I know I have a weak spot sometimes for putting in 75% of the effort in exchange for 50% of the reward. Thats always been a weakness of mine, and so it helps to hear someone else say I don't need to put in half to get 50% ownership. As long as the other partners are happy with the arrangement, me putting in 25-35% is fine. (or as you alluded to, or less!)

I appreciate your thoughts and now I feel like my questions are silly, but I appreciate your thoughts that there isn't a "right way" to do it, so stop "looking for it!"

I've been having some decent success in RE, and so now i have the opportunity of having a number of people asking to give me money. I've vetted and have two people I'm willing to use their money. I'm having a hard time figuring out how to go into partnerships with them.

I've searched around and it seems like most the conversations about partnerships are either Investor + Buyer or multiple equal partners going in together. Whats the best way to do it if your NOT equal and you are the one finding deals and offering a lot of support? I read about people doing this, but I don't see anything about how they actually set up the ownership/investments.

So here's my question- in these situations, should I try birddogging and give them the deals and charge them a fee, or is that illegal/shady?

Or should I go in 35/65 with them and take a 50/50 ownership?

Or should I just take their money and offer to pay them interest?

How do others do this to be both fair for the other investors and yet make it worthwhile?

I know there's risk to going into partnerships, but I'm OK with it. None of these properties are big enough deals that I'll lose sleep over them, but I could use their money on them to make the deals happen.

I'm trying to buy a residential property under a commercial loan.

My commercial lender will have no problem giving me the money- I already spoke to him about it- this is one of the smallest deals I've ever done- but my Commercial lenders all require a contract before giving me a commitment letter. This seems to be how every commercial deal I've done goes.

The selling agent on the residential property I'm buying refuses to pass the offer on to the seller unless I have a pre-approval. I sent him a pre-qualification, and he said no it needs to have the loan terms, etc. which the commercial lender won't offer without a contract!

This is frustrating me because I'm NOT going to do it under a residential loan, and I don't want to go run my credit to get a fake pre-approval just to put an offer in on the property.

In addition, I'm not going to negotiate much, so I see a 10% chance of the deal actually working out.

What would you advise I do in this case? Should I walk away? Lie to a residential lender about getting a property and let them run my credit? or go around the seller's agent and send the offer direct to the property owners?

There's one other option... and that is I could "offer" cash. I have the cash but I refuse to spend it all on the deal, but I was worried that would create more problems later if I threw that offer out there, and then I have to show them my bank accounts...

I can't be the first person that has dealt with this?


NOTE: If my commercial lenders are just nuts, tell me. I've also had other problems getting low dollar loan amounts and some lenders on here have reached out to help me. Just let me know if its actually my commercial lenders that are the problem and that pre-approvals are commonplace in these situations!!!

Troy is bigger, but Tipp City is within a 30 minute drive of all of Dayton, including Wright Patterson Airforce Base, and is right on the main corridor. In fact, the Dayton Airport is pretty much in Tipp City. Its also within 30 minutes of Springfield, OH, which in itself is 3x larger than Troy 

Not disagreeing, but Ohio does not have public transit to speak of. Virtually your entire market will be commuters, and I find the market range of a property in this area to be about 30 minutes. Tipp city has a much MUCH larger market within 30 minutes than Troy does, probably by 10 fold... but again it depends on your strategy. Troy is limited to... well... Troy (and a little bit of north dayton)

Not talking you out of Troy, just offering more to think about. I tend to be pretty risk adverse, and it only takes one employer to move out of Troy to cause demand issues. Take Lima for example, Population growth has been in decline for years. While Troy is hovering... growing below the state average, which is one of my REI investment factors. I only invest where growth exceeds the state avg.

Good luck with your investing adventures!

 Funny you mention Troy. I'm part of a development project there. I've been involved in Lima down to Cincinnati (I75 Corridor). Most the growth is between Cincinnati and Dayton. In Troy you are going to be fairly limited to C/C- properties. If that is your game, I think you can do well. There are some As/Bs, but I don't think the market is there to support it, so you might have a hard time filling rents profitably. There are some huge new strong A complexes being built at the moment and that is going to put some pressure on an already thin upper side of the market.

You may get some better deals just south of Troy in Tipp City. It is a smaller market, but it has the benefit of being within "working" distance of Dayton growth, pulling more Dayton demand and allowing you to compete with the Dayton markets. Troy might pull from North Dayton, but again most the growth is south of 675.

I'm involved as an investor primarily in B and C commercial, although I do some consulting with A and Bs as well as economic development projects. In addition, I'm an opportunistic investor in multifamily's when I notice the collective market is confused (ie- when a big corporation is adding thousands of jobs to a town yet firesale prices exist on all the RE). Parts of Ohio can be mini-rollercoasters. 

 Take it with a grain of salt @Sunny D. I'm attempting to make humor by stating "haha" and "No really though", followed by welcoming advice to come visit the state and get a handle on it.

This is one example that may be somewhat cultural- I know when I lived in NY, everyone took everything seriously. In the midwest, I don't even take a police officer pulling me over literal. Just another type of reason to visit!

We can save the economics discussion for another post (But of which I'd gladly have- it would be an interesting discussion really, but its probably not worth clogging this up. As a collegiate professor and someone who runs an econometrics program for one of the largest companies in the area, these types of debates are truly enjoyable) 

Happy Investing!

https://www.amazon.com/Scarecrow-Motion-Activated-...

Not a joke!

Don't invest in OHIO.

It is AWFUL.

And by awful I mean that every time I find a property I want, there's some guy from California bidding against me. Fortunately a lot of sellers have said they get frustrated with california investors, so I've gotten the chance to play clean up a few times... CA investors who don't understand the midwest > annoy the heck out of sellers > Sellers tell them to go away, and I swoop in as it leaves pending status...

I guess that is becoming my strategy... haha.

No really though, I invest in Southern Ohio. Its growing quickly, and is being reclassed as a larger metro area by the fed gov't, so jobs and whatnot are on the upswing. Population growth is 2x what it is in the rest of the state, and I find so many CF positive deals the only hurdle is if I can close them fast enough before someone from CA comes in with an all-cash offer.

I have talked to a number of lenders that are getting wary of the heavy out-of-state buying going on, and they are expecting higher LTVs from out of state buyers.

It may be worth a trip to Ohio. spend a weekend going from Cincinnati to Cleveland to Toledo and get a sense of the place. 

In my area, I'm noticing some interesting things. Large land plots are selling quickly and for good money.

Then I occasionally run across houses with large land plots, which are going for less than the value of the land alone. 

I've been watching this happen, and then I found a seller who is desperate to move, and they are willing to make a deal, especially because I can buy it cash.  The property is split up into 4 lots. The house is on 1, a 2nd house (servants quarters) is on a second lot with frontage, and the other two are land. In fact the other lots already even have separate addresses legally, and have their own frontage. 

It seems pretty simple to me that I could buy the house, then resell the house with just its one acre plot separate from the large almost 100 acre land plot, and double my money real quickly. Comparable houses to this house are selling for about 75% of the list price while similar size land plots within a couple of miles have sold for 100% of the list price. even after commissions and whatnot, it looks like a 150% ROI is realistic in just a couple of weeks. (or months depending on how long it takes to sell) . The 2nd house would just be icing on the cake even if I sold it for pennies.

It seems so simple, I feel like I must be missing something big or others would have already done it... 

I'll try that too. 

I also found this, so I know I'm not alone on the commercial loan under 500k issue:
https://www.biggerpockets.com/forums/49/topics/158...