All Forum Posts by: Daniel Devine

The Deal:  

A friend, whom I consider to me my mentor for the past 12 years, is looking to sell off his 3 apartment buildings (2-4 unit and 1-7 unit).  He currently owns them outright and built and has self managed the properties since approximately 1972.  He currently rents them below market and he admits that he is getting enough of a paycheck so that he is happy.  He turned 70 and now wants to get out.     

Asking price: $950,000 for all 3 buildings.  (all in same town, 2 4 units are next door to each other.  He is a friend and I don't want him to think I am going to exploit that fact to try and get a discount since he is my friend, so I am entertaining the asking price and using that number to keep all estimates conservative.    

As I look for lending options, he has hinted that he may be interested in seller financing a portion of the purchase but has yet to reveal the portion that he is willing to take back.     

I have run the scenario past a  friend who owns 10 apartments currently.  Bottom line is, he wants in.  When I showed him the Bigger Pockets rental property calculations, he said I was being too conservative on many of the numbers, and how he thinks the company should run.  It gave me a little anxiety that he and I would not see eye to eye on how to run business.  He is in his 50's and looking towards retirement and I am 34 looking towards long term buy and hold, wealth building.

Parents?:  My parents are the traditional "Poor Dad" mentality and I would like to make this mutually beneficial for both them and I.  They are entertaining the idea of cash out re-financing their primary home to keep the current payment but allow them to use cash to partner with me in this deal.  I have bought and rehabbed two homes at this point and done well.  They have faith and trust in me succeeding, but I realize that faith and trust alone will not keep tenants in the apartments.  

Questions

1.  If the seller decides to hold back a portion of the sales price and finance it, does this count towards the "down payment"?  May eliminate the need for a "partner"...

2.  Should I consider a partner who has experience, but I don't necessarily agree with methods?

3. I know that people warn against partnering with family, I intend on starting an LLC with clearly defined roles and responsibilities and percentages of "cash flow" disbursements (once reserves for company are built up). Parents will have a limited role, mostly just financial, (down payment assistance). Any thoughts, experiences, nightmares?

Will start with that... Thanks for reading all the way through and thank you in advance for the replies!

Points are 1% of the loan amount.  

Ex.   Borrow 100k with 2 points up front.  You need to bring 2,000 cash up front.

My impression of Ben's thoughts on property calculations are to treat the subject property as if it was 100% financed.   Run the numbers to see if it cash flows with none of your own money invested.  (believe he looks for approx. $100 a door)

Welcome @William Sousa

@William SousaI too am a new to the world of real estate within the past 5 weeks.  I'm in the Worcester area.   I started by looking around a bit and then listening to pod casts.  Great info on this site and invaluable info and book recommendations on the pod casts. 

Keep up the positive outlook and good things are sure to happen! 

-Dan

Still working on analyzing the deal.  Weighing the options on how to proceed.

@Rich Hupper  I have suggested this to the owner and he may be interested in doing a partial seller finance.  He wants some cash out.  Still imagining ways I can do this deal.  Either by taking on a partner or creatively financing.

@Cynthia Nina-Soto, Thanks for the welcome!

@Colleen F.  I am hoping that the experience gained from dealing with people from all sorts of backgrounds will help me in the long run.  I consider myself to be a jack of all trades and recently started pursuing real estate education with a purpose.  Looking to build some passive income that will build long term wealth. 

Yes, currently own a home west of Worcester and the properties that are my goal are along I-290, East of Worcester. 

This is my first post so please bear with me...

So I've always been interested in Real Estate.  Bought my first home in 2007, complete basket case and was considered by the neighbors as the "scary house on the corner".  5 years of sweat later, it sold and I walked away with some money... don't know how much i had in it but it served its purpose as my primary residence and a "flip" of sorts. 

     After a rough patch in my personal life, I bought my second home, once again, a project.  Total gut job.  Almost finished with this now and looking to invest with the profits.  

     I am a police officer in a small town and have days where I do a lot of driving and got turned on to a website called Mr. Money Mustache, (financial independence blog) and while reading that site, I saw an advertisement for Bigger Pockets, clicked on this and instantly got the bug.  Found myself starting listening to the pod casts instead of same old songs on the radio.  

    ACTION... that was the recurring theme of the last of the famous four questions.  I decided, why not.  I then signed up for a real estate class set to begin in 2 weeks.  I then signed up for the test on the 3rd week and passed the exam and became a licensee in MA.      Over the past 12 years, since leaving college, I made some good friends who were a little more expierience than I and I began helping them out as much as possible, in exchange for hearing stories over coffee.  Without knowing it, I had mentors showing me the way.  

     Fast forward to today, one of my mentors has 3 rental properties (15 apartments) that he wants out of.  I approached him and let him know that I want to purchase them.  I have been helping him with the maintenance of all three buildings over the past years and am exicted about the possibilities that lie ahead.  

    Bigger Pockets Pro Membership was a small price to pay for vetting this deal.  

Feel free to message me and if you have any words of encouragement or advice. 

Thanks in advance!

Dan