All Forum Posts by: Daniel Phai

Thanks for the insight David. Appreciate the help. 

Hello BP!

I have a possible partnership opportunity and I wondered some of your thoughts and expertise. 

BACKGROUND

My partner has all the capital for the upfront costs to purchase a single family, but doesn't have a great job or credit score to gain a nice mortgage. He also has zero experience. I've been mentoring him here and there. In my advantage, I have done deals before, I have a team set up, I have a high paying job and excellent credit, and I'm currently saving up for a multifamily deal which I would love to do on my own. 

It'll take me about 6 months for my multifamily goal, so in the mean time, I wanted to see if this partnership can be a great way to spend my down time doing an actual deal and also getting some extra cash flow.

My potential partner and I have complete trust in each other and have worked with one another for four years. There is no question about integrity on either end.

QUESTIONS

1. My approach will be to be 50/50 partners. He will pay all the upfront costs (down payment, closing, minor rehab, etc.). The only skin I will have is putting a $10k reserve for this property. I will use my credit and my work history to get the best rate and pick up the entire mortgage. I will also be a mentor to him throughout his first ever purchase. Thoughts on my possible future set up?

2. I want to make sure that we're both protected. I would love to set up a contract. Anyone have any experience setting up a contract listing 50/50 partnership, operating agreements, etc.

3. How does it work in terms of taxes? For example, if the mortgage is under my name, the interest is deductible. How can my partner get some of those benefits?

Thank you!

Daniel Phai

Ah, I see. Thank you for your reply. Appreciate it!

Hello Everyone! 

Just took out $100k of equity on my primary house to invest in real estate! Just got under contract and now I have a few options. My mortgage broker is asking if I want to put down 20% or 25%. I'm liking the 25% because of the better cash flow, but I'm wondering for tax purposes what's actually better. I hear that down payment cannot be deducted or written off. However, because it's from the equity of my house, is it deductible? 

Thanks in advance! Love BP Family!

Thank you!

Investment Info:

Other other investment.

Purchase price: $890,000
Cash invested: $500,000

House Hacking. Currently living in the main house while renting out the back house. Airbnb'ed the guest house for awhile, but laws in Los Angeles changed and forced us into long term renting. It all worked out for the best!

What made you interested in investing in this type of deal?

My wife and I wanted to purchase a single family for ourselves, however, there was a private guest house in the back where we heard the previous owner used it as a short term rental.

How did you find this deal and how did you negotiate it?

Real Estate Agent. The best real estate agent, Penni Ziers.

How did you finance this deal?

Used private money from our parents. They own property themselves and actually sold one of their properties to help us.

How did you add value to the deal?

We put in $100,000 in renovations. It took about 4 months, but very happy with the results!

What was the outcome?

We didn't mean to rent out the guest house, but it has been a steady flow of income for our family and can't imagine life without it.

Lessons learned? Challenges?

Two rookie
#1. Pick a place where the colors are not affected by the lighting. We wanted a beige color, but when we looked at samples our yellow lighting altered the way we saw the colors. So our first try, our contractors painted the house pastel purple. This was our fault.
#2. Our granite sample was small and when it's small you don't realize that you can feel differently as a big slab. We changed it once the slab was already cut. Costing us a lot of money.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes! Real Estate Agent, Penni Ziers. She is amazing!