All Forum Posts by: Brian Stieler

Hey Phil. Sounds like a great problem to have.

My first move would be to really understand what the investor is hoping to achieve. Perhaps she is 60 years old and wants passive cash flow for retirement. While buy/hold sounds great, it could be too long term for them to start seeing the benefits. Perhaps you could use their money as an interest only loan so they see yearly guaranteed returns and you can build your long term portfolio. 

I'm working through the same dilemma now, so please update this thread when you come up with a decision.

Hey Jorge. I too use Foremost. They offered me competitive rates and can insure multiple properties. Good luck.

Hey @Robert Ombres

We did follow through with the agreement, but haven't transferred anything into the LLC just yet. You are correct that we can't just quick deed the house in without the mortgage company getting upset. I believe in the future we have to get a commercial loan from the beginning. I'll update this post once I find out more info.

Update:

Sorry for the late update on this one. We just recently finalized it due to other things going on in life. 

What we decided for this one was a bit unique. My financial partner would get 100% of the cash flow until their original investment was repaid. That seemed to work for them since they had 100% of the liability ownership of the house. Once their original investment was repaid then we would split the cash flow 50-50.  The equity would be split from the moment we purchased the house, and any repairs beyond what it would need to be rented would be also split.  They saw this financial investment as a way to build long-term wealth. They weren't concerned with receiving a monthly check now, but instead reinvesting that cash flow into more houses. 

We did discuss the 10% management fee that I would typically see in a partnership deal. I have a property manager overseeing the properties so my work is pretty limited beyond finding the deals and making yes/no repair decisions.  We agreed that for now I would waive the 10%, and just receive the 50% equity and future 50% cash flow. However, if at any time my workload seems high, then we would rethink that 10%. 

Other highlights:

• Lawyer costs to draft this up ~$1000 (started at $500, but we had 3 rounds of edits)
• Agreement helped shed light on "what happens when" moments. (Repayment, removal of member, responsibilities, death of member, etc)
• How to purchase the home. Financial member buys in their name, then quick deeds it to our LLC.

Great agreement reference to start understanding all the elements:

http://nationalparalegal.edu/documentMovies/busine...

Let me know if you have any questions about this, and I will try to respond as quick as possible. 

@Bret Burkett

Thanks @Matt Schelberg for the insight. 

My potential partner is looking at this as primarily a cash flow for retirement strategy. They are currently 60y/o and would like to retire within the next 5 years. Buy/hold would help to diversify their portfolio, and hopefully give them a monthly income stream. While equity is important to them, they don't want their big payout to be in 20-30 years.

@Roy N.

Great breakdown. Thank you. 

I like the idea of the sliding partnership ratio, with an eventual 50/50 split. When they posted that question, I couldn't help but agree that they have 100% of the liability in the deal, and I'm merely a leech on their investment (an educated and connected leech, but still). I'm going to write this up in my packet and present it to them. Thanks for your help.

I've put together a partnership agreement and presented it to my potential partner. It's structured so I am the managing partner, and they're the financial partner. They are responsible for the downpayment, closing costs, and initial repairs. I just presented it to them, but they've come back with an interesting question.

How is it a win situation for my financial partner if they don't see a true profit for ~10 years? Let's say they invest $30k for the house, and we split the cash flow. If they're only getting $3k/year, it's going to take 10 years before they see a profit. 

I proposed letting them get the full cash flow until their original investment is paid off, we'll split the cash flow, but then I'm getting nothing ( not counting appreciation and equity) for 5 years.

Am I missing something?

Hey @Todd Campbell,

Were you ever able to find one? I'm looking for something similar. If I come across one I'll share it here.

Thanks

Thanks for your help @Jeremy Tillotson @Jean Bolger @Colleen F. . I'm going to reach out to her this weekend and express my interest. Very interesting about the capital gains issue, so I'm sure it'll be awhile before a sale is an option. Perhaps I could lease to own in the mean time. I'll report back what I find out.

Hopefully you guys can help me out with a creative solution.

I currently rent an awesome 2bd/1ba house in a great (but expensive) location. I love this place and would like to own it. My landlord is a very sweet 89 year old woman that lives 3 hours away, but also owns a couple of properties in my area. I say this with all due respect, she certainly shows her age when we talk, as the conversation gets a bit spacey (think great grandmother type). She has two kids that will help out when she's not feeling well or things get to be a bit much for her. When I first moved in, I mentioned I'd potentially like to buy the house, upon which she brushed it by saying she wasn't interested in selling it.

My thought is, I'll ask her again, but I'm guessing she'll have the same response. She's probably very comfortable collecting rent and living an easy life. I'd then reach out to her daughter and ask her, though I'm sure she sees it as a money generating asset, and the family plans to keep renting it out. 

Any thoughts on how to creatively go about this? Lease to own perhaps?