All Forum Posts by: Don Pham

Hello,

Fairly new investor here. I've been house hacking for the past 5 years, so I have some minor experience in purchasing real estate and dealing with tenants. I was recently let go from my job and am currently self-employed. Most likely I will need to let my self-employment business season for another year before banks will readily approve me for conventional loans. In the meantime, I am looking to partner with someone I know to purchase a property cash. My question is, what is customary for such partnerships? We each would be providing half of the cash, but I would be doing all of the work (acquisition, rehabbing, managing, bookkeeping, etc). Like a 60-40 equity split? 75-25? Would it be better just to take the money as a personal loan? What would be customary for a rate of return (I was thinking like 8%).

Technically I have the cash to go solo on the deals I'm looking at, but I was prefer to own a smaller portion of more properties for risk mitigation. 

What're your thoughts?

Thanks!

Don

Thanks @Jennifer Maldonado ! Sorry I haven't replied yet, been on the road and bracing for Matthew! 

@Kaz M. Yes, makes sense. I actually do have some friends and family who would want to become equity partners. However, I hear all the time that interest rates are so low that it's worth it to finance real estate with debt if possible. What kind of profit sharing is commonplace if say another person and I go 50/50 to finance a property, but I'm the one who does all of the work and the other person is a silent partner? I know each deal and situation is different, but I'm just trying to figure out a ballpark range so I don't risk offending the other person or really short changing myself.

@Brian Pleshek Thanks for the consideration. I for sure am leaving the industry, so that's not really an option. Regarding tax-advantaged accounts, you're right--there's always a tipping point where conventional rules no longer apply. 

@Kaz M. and @Adam Adams Definitely will look into private money lenders. 

Anyone have any recommendations for ones in South Florida? Or should I search that in a specific forum?

Thanks all! Super exciting!

@Kaz M. I've actually asked if sellers would be open to seller financing, but rarely ever does anyone bite. The problem is that my market is full of RE investors who just want to deal in cash.

Hello, thanks all for the replies--definitely appreciate the input! I am looking for sure to use OPM as much as possible, but I don't see conventional loans as an option since I don't have the income to qualify. What are other ways to leverage money apart from just raising equity from my network? 

Hello all, first-time poster on bigger pockets. Sorry in advanced if it's a long complicated post! 

I'd been listening to the podcast for about 4 months or so, even started getting prequalified for a mortgage but never pulled the trigger. I recently lost my job a month ago and have been thinking of buying some real estate properties to rent out. I am somewhat familiar with my area (Broward County, Florida) and own one rental property with my parents that we bought with cash in 2010 and split the rental income 33 (me)/66. I also invest in securities where most of my assets are tied up, but I am looking to move into real estate as I think stocks are nearer their peak than real estate in my area. My situation is this:

I have about $150k in assets broken down by $50k in cash, $20k in a 401k, $50k in Roth retirement accounts (can be pulled out without penalty but would prefer to avoid losing tax advantage), and $30k in liquid securities. 

My side gig, now my main gig, now makes me about $3k a month tutoring. However, most of that income is offset by expenses to reduce taxes. I am currently in the process of filing my 2015 tax return (extension) where I can remove those expenses to increase that year's self-employment income, but that income would be taxed at the 28% bracket so not sure if it's worth it. 

I have no debt (car paid off, no credit card debt, no student loan debt) and pay no mortgage on my current home, so the $3k is unburdened cash. 

My credit score is in the 780s.

Because of my loss of W-2 income, I doubt my self-employment income from my 2014 and 2015 tax returns will paint me in a good light (since it was side work, I think my 2014 tax returns says gross was about $10k for the year). 

Are there ways to get lending that will consider the rental property itself as an investment? If so, how and is that a good idea?

Would it be better to buy properties with cash outright? I am a little wary of burning all of my capital and would prefer to leverage it if I could.

Should I try to find equity partners?

Should I sit out of the RE market, hope I don't burn through my capital, waiting for the next downturn and set of opportunities then?

Any advice would be great. Thanks!