All Forum Posts by: David Martin

@David Martin No problem...I've been there. It's going to be harder to get up and going than you expect but likely easier to manage once you are launched. Feel free to send me a DM if you have any questions or think that I could be helpful.

I can't speak to partnerships...just not something that I have experience doing. As for setting up a short term rental, I have done that.

1. It's going to be death by a thousand cuts after you purchase the house. You going to bleed cash and spend a lot of money furnishing a place. Make sure that your parents (and you two) fully understand that. It's going to be expensive, stressful, and you'll have a "this better work bc we're spending so much money" pit in your stomach for a few months. @Trent Reeve can attest to that as well.

2. You need to figure out if your parents are equity partners or just a lender. Don't do a hybrid. You can base the payback on monthly payments or a percentage of profits. I'd recommend a higher percentage of profits until they are made whole on their initial investment. Like 50%+ of profits until they get their $20k back, then it goes to 20% in perpetuity, principal plus their interest rate, or until they get 1.5-2x their investment back (or whatever seems fair). Or if they are equity partners, they put in 33% of the money, they get 33% of the whole pie - profits, equity, etc.

If it just takes another $20k to get you up and going, how much longer will it take you to save that amount of money? I'd prefer waiting an extra year to get started over partnering with family...just my opinion and personal preference (which is worth what you paid for it). 

 I can see how that may be preferable to them, I would say have a couple of options for them. If they take the profit route, i would expect more than 20% (again, based on them providing 1/3 of your starting capital), especially if you are getting all the equity. 

so they are providing 33% of your upfront capital, but only see 20% of profit? also, i would think it would be reversed. they are providing the capability to purchase, so they should see equity but maybe less profit if they arent involved in day-to-day. 

You can purchase an owner-occupied property with less than 5% down. You need a place to live. Why not purchase a property with two or more units using the low-down option? Occupy one, rent out the other(s).

Scott Trench started with a fourplex. He rented the three other units, a spare bedroom in his apartment, and he even rented out his primary bedroom as an AirBnB and slept on the couch to maximize his return.

You can put 15% on conventional and 10% on hard money. There are private money lenders out there who have lower down payment options as well. 

@David Martin - I second @Nathan Gesner feedback. Househack a multi and you can get in with a lot less down, as little as 3.5% with a FHA product. Why pay 15-25% down for a property when you can get a primary residence and get into it for cents on the dollar? Additionally, you might as well have your "rent" go towards your mortgage paydown rather than someone else's.

Lastly, if you are going to go the Airbnb model, just make sure the property has another exit strategy. For instance, it should make sense as a long term rental and a Airbnb to reduce your risk. Airbnb has seen some declines since the recession hence you don't want to be locked into that that one strategy and realize it doesn't cash flow after the fact.