All Forum Posts by: Mike Landry

@Joel Owens  I understand what you mean about not syndicating small deals.  That being said, i'm looking to buy from an unsophisticated mom and pop type seller (with the intention of not ever becoming one, LOL) and am not willing to just buy any market rate deal.  I'm gravitating towards parking my own money in multifamily because of income based valuations that includes management, cap ex, legal, ect.  A purchase of less than 1 million seems reasonably within my grasp.  I'm not against paying for the legal help when ready. 

I understand the economies of going larger but I'm not looking to park my money in a syndication, learn nothing from it, and collect 8% while the syndicate makes out with the majority of the earnings/equity while my money took all the risk.  I think that is great for some people but not what I am after.  

@Jason Bindra  I'll look into Howie's rule.  You are correct.  It is immediate friends and family as of now. 

@Cody L.  When you borrowed from your friend, how did the bank feel about it.  How much in % of purchase price did you borrow from him.  Were you still putting down the majority of the downpayment?  I need to talk to my banker but I'm not sure how they would feel if I was bringing %5 and borrowing another %20 from friends and family and then financing the rest with them.  But I do like the way you think and will look into the structure.  thanks.

Thanks everyone for the input!

Makes sense @Jeff Greenberg. Thanks. So the only way to avoid that would be to have all the investors own a voting share in the company? Does the share have to be equal to the capital contributed? Could I control %50 and the remaining 4 control the other %50? I do intend to reach out to my cpa and attorney before I move forward with anything. I'm just trying to get a kick in the right direction here. I'll have to look into the TIC, thanks @Bill Gulley. 

@Cody L.  Thanks.  You are reinforcing my thoughts that you either need to buy it yourself or do a syndication.  If I could get 3 others to go in $50K would I have to make it a "syndication" or a security as @Jeff Greenberg suggests.  I guess I need to look into those laws but I am really trying to avoid the hole syndication profile.  Paperwork, disclosures, added expenses, not to mention I'm not too excited about raising money by selling my investment plan.  For such a small purchase it seems a little excessive.  And finding like minded partners would seem to be a reasonable way to get into it at first glance.  

Would setting up an LLP with yourself as the controlling member avoid any of the security issues. Also I don't want to offer 10% interest on your money, I want to offer the earnings on your share like what Cody's friend is getting whether it increases 3X in value or only makes 5%. I do have two accredited people that would probably do $50k.

I'm not trying to circumvent the legalities.  I was thinking there was a way to break into multi's to gain real experience before trying to put together a syndication in the future.  

We did the same with a small roth IRA. Withdrew the principle tax and penalty free. Not sure what the rules are for a roth 401k. I like you have a much larger amount of money in a pre tax 401k.

However, I think most people downplay the benefits of long term stock market investing and I would suggest one reason to keep the roth money in there.  As you approach retirement you want to be able to plan your tax strategy.  It would be greatly beneficial to have some roth or post tax contribution sitting there to use as a "trim tab".  Maybe you have a year where your expenses are lower and only need to withdraw XX amount from your 401k keeping you in a low tax bracket.  But maybe the next year, something comes up and you need a lot more $$ out of your retirement.  You could then choose to withdraw the roth $$ keeping you in a lower tax bracket.  Using the roth/post tax money to help you stay inside your intended tax bracket stress free.  Just a thought.

I would like to deploy some money into Multi family 10 to 50 units in the next couple of years.  From what I read it seems to fall into 2 categories.  

1.  Either you have a lot of money and buy one on your own.  

Or

2. You put your money in a syndication, where the "syndicate" benefits substantially from your capital (rightfully so, I'm not disagreeing with the value they can have).  

However I am looking for something in between and curious if anyone out there does this. 3 to 4 partners (that are already involved and experienced in REI) each contributing $50,000 towards a multifamily unit. Everyone taking part in the decisions, equity, and cashflow on an equal basis.

I'd like to prepare myself for when/if the small multifamily market in the Houston area corrects and be ready to buy a deal if I come across a good one.  Iv'e been successful with direct marketing SFR's and would like to try a multi-family campaign in the Conroe, Spring, Willis, north Houston areas.  I like the idea of diversifying away from SFR's.  I'm not really interested in selling most of my SFR's with low interest rates to go all in on a small multi.  I'd rather team up and leverage a few peoples experience and $ along with mine to break into the multi side.  

Most local investors I talk to want to just wait and 1031 one (long) day down the road, don't have the capital, or are trying to syndicate themselves.

Is a small partnership like this too risky?  Is anyone doing something like this?

In Texas some auction.com properties go up online occupied. It's after the actual foreclosure but the bank has not evicted the old owners yet. they are selling it to you for a discount to mess with that headache. As soon as they do get them out, they usually increase the price and you can view the inside. Could be a tenant, could be an old owner. Good luck. 

Here is a good 10 page thread on it. 

https://www.biggerpockets.com/forums/49/topics/329...

The catch is they want you to pay them to know the "secret". There is no secret. Shuffling your debt around does not save you anything. you can pay all the extra $ each month towards your mortgage and get virtually the same effect. Do a search, there are a few good threads on it. 

ok.  Yeah my friend is the seller and they really are not in a rush or need to sell fast at all.  They already moved into their new place and this one isn't costing them much.  They are trying to get the most they can for the house and won't drop the price much at all.  We want to make sure there are no rules disallowing fha buyers from bringing a little extra to closing to cover the appraisal difference.  Or would we be better off demanding conventional. 

Asking for a friend. They have a contract on the sale of their house, multiple offers first week. We know their agreed price is on the high side. Guessing appraisal will come in about $10,000 low. Buyers are doing an fha loan with about 13% down but pre-approved for an fha with a LTV of %96.5. What options can we expect if the appraisal comes in low? Are the buyers ALLOWED to bring the difference to closing on an FHA loan? The sellers probably won't come down much. Should we insist on a conventional loan instead? Does it make a difference on the ability of the buyer to bring extra cash to closing?

Thanks