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All Forum Posts by: Jon Passow

Jon Passow has started 26 posts and replied 97 times.

Post: Newbie Partnership Structure

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

Had a few questions when it comes to structuring a deal with a money partner. I know the options are endless but I was hoping to get feedback on my plan. For my first BRRRR property I have a partner that wants to be the money guy. I will find the deal, oversee the contractor, reappraisal, and oversee the management of the property for as long as we own it. He will provide/find the down payment, loan, rehab money, and refi.

I was thinking of having a 60% cut of profits for myself and 40% profits for his efforts. When it comes to the finer details, that's where I'm a little fuzzy. Would it be my partner's name on all the loans and then both of our names on the title? Also, if there's any cost overages on the refi would that be provided by him? What if the refi doesn't cover the costs of the project, who eats that?

Post: Earnest Money Deposit with Contingencies

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

I was listening to one of the Bigger Pockets podcats the other day and the guest said that when they first say they are interesting a house and before they make a earnest money deposit they have the home owner sign a contract saying that the purchase is contingent on them finding funds/loans to purchase the house, home inspection, etc etc and if any of those items fail to happen they get their deposit back.

I have a few questions about that. Is that something you can get a template for online or will I have to go to a lawyer to create me a document for that (looking to invest in Ohio btw). Is that something you give the real estate agent to sign and fax back to you? What if you see the property online and they want the deposit done through their website and they have their own contract they want you to sign?

Post: $10k to start REI business- Fact or Fiction

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

So, I've heard from many sources that you need $10,000 minimum to start investing in REI (for down payments, etc). I HAD saved $10k and was ready to start my BRRRR strategy remotely in Cleveland from California but our first born came a month early on April 1st. Due to an emergency c-section, the wife can't work for two months and she dipped into my funds to pay bills and we can't pay it back. So that leaves me with $6k to start investing. My question is is this do-able? Is the 10k minimum fact or fiction?

I'm trying to ask myself "How can I make this work". :)

Post: Debt Consolidation/Credit Counseling

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

Thanks everyone for their comments! After talking with my friend, he said that he thinks doing a budget would be a good idea but also a lot of his debt isn't from superfluous spending. It's from a move cross country that he did, from building his own house, and from the personal loan for the down payment of the property he built his house on.

@Seth M. Jones, I think what you wrote in particular is spot on. My friend told me that he's treading water with the debt because it is spread out over two credit cards and a loan and he just keeps paying the minimum (except for the loan, because he's been paying that one down. He started at 15k and is at 8k now). I will tell my friend about Dave Ramsey. But I would love to pick your brain a little about how your clients bundled their debt together. Mind if I pm you?

Post: Debt Consolidation/Credit Counseling

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

One of my friends knows I'm starting my real estate investing company this year and I guess this means I'm an expert in financing since he started asking me all sorts of questions about his debt, lol. Thought I'd throw this question out to the group so I could point him in the right direction. He has about 20K in debt spread over a few credit cards and a personal loan from a bank. While he is able to make the minimum payments on his debt he knows there might be a better way to budget/get out of debt sooner without effecting his credit score negatively.

When he did research he quickly became overwhelmed with his options especially because of all the scams that are out there. I was thinking that since he doesn't want to go the bankruptcy route, and doesn't have anything in collections, that maybe talking with a non-profit credit counselor (any recommendations from the group?), or possibly getting a 0% interest credit card and moving a large chunk of his debt over to that to help him pay things off quicker would be the route to go. Any thoughts of recommendations would be appreciated :)

Post: Newbie Freindly Cleveland Bank Recommendation

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19
Originally posted by @James Wise:
Originally posted by @Jon Passow:

"Hello Cleveland!!!" Ok, that never gets old, right? I'm gearing up to approach banks to get per-qualified for a loan and start to build relations ships with an underwriter that I will use over and over again for my first few REI deals. Before I start cold calling banks/credit unions, does anyone have a few local contacts they would recommend? This will be for multi-family homes, non-commercial, and I will eventually be setting up a LLC but for the first few deals I'm just doing it under my name.

If by non commercial multi family you mean 2-4 unit properties You don't really need to reach out to Cleveland lenders to get loans. Some of my most used lenders aren't local to Cleveland. It's not uncommon for me to be involved in a deal where the lender is from one state, the buyer is from another & the property is here in Cleveland. Big firms like Wells Fargo are great. Some other solid lenders are Supreme lending, NLC Loans & Nations Lending. 

One important thing to note is that traditional lenders will not want to lend to an LLC. They only do these loans if you've got title in your name. If you are looking for non traditional loans a lot of my clients have had good luck getting blanket financing through Lima One Capital. Secure Lending Incorporated is another good one.

P.S.

If you haven't already done so read The Ultimate Guide to Grading Cleveland Neighborhoods because, well it's just freakin awesome.

 Hi James and thanks for the info! Read the Ultimate Guide a while ago, great info in there :)

Post: Newbie Freindly Cleveland Bank Recommendation

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

"Hello Cleveland!!!" Ok, that never gets old, right? I'm gearing up to approach banks to get per-qualified for a loan and start to build relations ships with an underwriter that I will use over and over again for my first few REI deals. Before I start cold calling banks/credit unions, does anyone have a few local contacts they would recommend? This will be for multi-family homes, non-commercial, and I will eventually be setting up a LLC but for the first few deals I'm just doing it under my name.

Post: [Calc Review] Help me analyze this deal

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19
Originally posted by @Jason D.:
@Jon Passow no problem! Does the purchase price include paying the back taxes? You'd have to buy that property for somewhere around $40k to get where you want to be. That's going to be a tough deal

 Not sure about the purchase price including the back taxes. Doesn't the seller have to pay the back taxes?

Post: [Calc Review] Help me analyze this deal

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19
Originally posted by @Jason D.:
@Jon Passow you've got it all out of whak.... From the beginning, I notice that the purchase price plus repairs is MUCH less than the after repair value, is that correct? You also have your mmaintenanceand capex all wrong. You want to input the MONTHLY costs for these things. For instance, you have maintenance at $1800 per month, which cant be right, I hope.

OHHHHH!!!! There's one major mistake! It's a percent value NOT a monetary value (I had $100 instead of 10%). Once I fixed that I got a monthly cash flow of $65. As for the after repair value...that was one I had a hard time calculating. There's a range of properties in that neighborhood from $100,000-$175,000 that are similar to the property in the report. I went with a lower number for the ARV to be conservative. Looks like I would need to lower the purchase price greatly to get a better ROI (currently around1% as opposed to the 12% or more that I want). Also, the property has $19K in back taxes so I might even be able to purchase it from the county if they take the property. New Report

Thanks for taking a look at this, Jason!

Post: [Calc Review] Help me analyze this deal

Jon PassowPosted
  • Rental Property Investor
  • Cleveland, OH
  • Posts 98
  • Votes 19

View report

*This link comes directly from our calculators, based on information input by the member who posted.

This is my first deal I'm analyzing and I'm not 100% sure I did it right. Would love someone to double check my work!