All Forum Posts by: David Wilson

John,

I appreciate your reply, and I agree that risking his credit is a big deal for him, but I'm trying to valuate what his credit is worth, since he's not investing any actual money.  He's familiar with our operations and is excited to get in and get a slice of the pie, so to speak; however, if our company profits were $400k I'm reluctant to offer $100k or 25% just for credit.  And I've had the thought about comparing to stocks or other investments, even private RE lending, but with those there is money to base a return off of.

I'd be interested to see if @Brandon Turner has ever thought about anything like this or heard of anything along these lines

So I have a creative financing situation that I need some help with.

My Brother in law and I are flipping houses together and our father in law is our contractor help, but also has some investing potential. 

He has some property that he owns free and clear, and we've discussed about him getting a HELOC against it, but here's the complicated situation, He makes enough money with his retirement to be able to borrow about 350k against but his credit isn't currently in good enough shape to get a HELOC. We could just do a straight up refi, but we like the HELOC idea so we only have to pay on the money we need at that time. (And I know thats a whole other discussion to be had) but what I'm asking advice on is this:

One of our family members has Excellent credit and makes way more than enough to qualify for the HELOC if we put him on the deed to the property. What we want to pitch to him is doing that so we can access the money we have in this property, but what our dilemma is, is what to offer him for compensation. we are currently structured profit splitting by thirds (Father in law, Brother in law, myself) and someone mentioned offering him 25%, but I feel like that is way way too much for just allowing us to use his credit.

So my ultimate question is--What would be a fair offer for him as compensation for risking his credit, but ultimately none of his money?

I was thinking something in line with private lending 7-12% but what dollar amount should we base that on?

What would you do in this situation?  I know ultimately this decision is ours, but I'm really interested in other ideas to brainstorm off of.

Thank you in advance!  I'll try to reply as quickly as possible!

Dawn Anastasi congrats on this deal! Sounds great! I know you said it's not a flip, but if you were to sell it in its rehabbed condition, what are the comps around the area? Love the sound of those rents for that amount of money! Congrats again!

I just heard about a house I did work on a while ago that was burned to the ground because the people there were welding in the garage.. I agree that there is the potential for your tenant to be doing it safely; however, if I had heard my tenant was welding in the basement, safely or not, I would have a problem with it and (diplomatically) try to shut it down.

@Jason James

 make that 6 cents!  That was my first thought about this situation.

A great resource I found is the book on estimating rehab costs by J Scott. It's well worth the money and you get some free goodies when you buy from the bigger pockets store. Also look through the BP fileplace, you might be able to find some file downloads of forms people have.

I say let them post all the articles about how bad REI is!! If there are people out there who make a decision based on a CBS news article about not investing in real estate, thats more for us! Once REI becomes "cool" and "hip" again, the people who don't know what the heck they're doing will come in and drive the prices up, over-inflate the market again, and cause another crash (even if its not as bad as the last one). Granted all this would take time, I'm just saying it would be nice for the "overnight-millionaire!" crowd to stay out of REI for just a little while longer. :)

Just my two pennies.

It'll be great to meet you at the reia! We chose springfield because my brother in law lives in Ozark, and we have some established relationships there. Our father in law lives out in the country in Ava and my wife and I eventually want to buy land and live out there once we've built up a portfolio of cash flowing rentals (future focus) So really springfield is a little bit convenience mixed with a little necessity because of family; however, I think I might want to branch out to either the Kansas City or St Louis market...but that's a ways away. As They're always saying on the podcast, you can always find a place to invest within just a few hours of wherever you live

I don't know if I'm "allowed" to post in the newbie section twice, but I feel its appropriate.

My name is David Wilson and a while ago I found BP, started perusing, and posted an excited newbie post not knowing what the heck my goals and desires were.  I posted hoping that the actionable step I had taken would be to my benefit; however, until recently I've been stuck in a rut and not known how to get out of it.

I currently reside in Charleston, SC and work doing residential Electrical work.  I enjoy the work, but I want and see bigger things for my family.

My brother-in-law and I have the same kind of mentality and are both super excited about real estate and the potential it gives for freedom to be with our families.  We decided to start investing in the Springfield, MO area and are focusing on Fix and Flips.  We have a private lender in place and also sort of an "in-house" General Contracting company that we will help manage.

My wife and I have a lease on an apartment in Charleston until June, but I'm working on all the remote portions of the investing while we wait for the lease to end. While I can't be "boots on the ground" yet, I'm excited about this opportunity and I would love to connect with investors in the greater Springfield, Missouri market to talk, learn from, and potentially partner with. We are also looking for wholesalers in the area for flipping deals as well as doing in house marketing and trying to get what we can from the MLS

We are really excited about this new opportunity we have and the potential for where it takes us.

If you are from Springfield and are active on here, please reach out!  I'm more than happy to get in contact and see what things we can do to be able to help each other out!

Thanks in advance!  Any and all questions y'all may have, I'm open to communication!

David Wilson

@Junior Salters thanks for the welcome!  I love the upstate area! I grew up in Rock Hill.

@Paul Timmins I've read a lot of that stuff, but thanks for the tips, especially about the multi family HUD idea, I had never thought about that! Also Im planning on buying those books, I read the intros about them and I know those are absolutely something I need to read. Also, I love listening to the podcasts, I listen to at least two every day.

Do you have any suggestions about attending a REIA meeting? Should I bring anything? I never quite know how to interact at a meeting like that, but I don't want to make a bad first impression.