All Forum Posts by: David Clinton III

I find a more accurate number is 40-50%, when counting for maintenance, vacancy, and CapEx. I prefer to leave mortgage as one calc and lump insurance and taxes in with this 40-50%.
things that make it fluctuate significantly are age of property, how much work was done up front (to prolong CapEx expenditures), and bedroom size. Studios and 1-beds tend to have higher turnover, which eat profit pretty quickly. 

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Yes, in my opinion, the purpose of the mini mortgage is to make the money partner whole. So if  the interest rate matches, this is mainly to cover his payment on the primary mortgage. Or, the interest rate can be inflated in such a way that causes the interest dollar amount (into the money partner’s pocket) match the interest outflow. 

I think it’s simpler to have the property cash flow pay the actual mortgage, and agree that all distributions from the property are first return OF capital before return ON capital. In this way, the partner with no money in doesn’t see profit until the money partner is back to break even. 

I like this arrangement whether I’m the money partner or the sweat equity partner.

When I structure things like this, the property cash flow covers the actual mortgage from day 1. So I would make the interest rates match. The money partner isn’t necessarily trying to earn a spread on the deal until after they are paid back, made whole, and the cash in the deal becomes zero. 

I’d start by looking at your goals. Do you want to be in the note business? Even if you thought “someday I’ll do that”, this may be the best opportunity to dive in and get started. Learning by doing is the most effective way. 
if you’re not particularly interested in being a note investor, that’s okay. Don’t let it become a “shiny object” that takes you off the path to your goals. Put the deal together, get an assignment fee, and move on without regrets.

I would recommend starting a REIA of your own. Advertise wherever you can think, and maybe you'll attract like-minded people!

I like Rentec Direct, myself.

 Oh, I agree with you. A good contractor who is also responsive and courteous and professional can always charge the highest end of the market. And if they are smart, they will! I don’t -need- those things in a vendor. So I’d prefer to find vendors missing one of those things that will keep them from truly being able to charge more in the market. Can’t have it all, unless you want to pay for it all. 

I used to think the same. My perspective has changed. The best (small) vendors I have worked with don't advertise because they don't need to. They work with who they want to, because they can. They don't need new clients if they are content with those they work with. They charge on the higher end, and are not even looking for new clients. These are often the best people to work with, and you almost have to earn the right to do business with them. Money isn't the only solution - these people want to enjoy their work (and are great at it).

That's great! I really appreciate this article: https://www.biggerpockets.com/...

Use your team members to be the bad guy when you fear you cannot (my property manager is the greatest asset in that arena).