All Forum Posts by: Kazi R.

Thank you all for your responses. I ended up rejecting the application. I have never approved an application with eviction record before, so I was already on the fence on this one. Then I called her to get some clarification. She at first pretended that she didn't know what I was talking about! Then she remembered, but said eviction happened 4 years ago even though court record shows it happened 2 years ago. Then said she was paying off the previous landlord, but wouldn't be able to provide any proof of that! In short, she was not truthful or accountable. I didn't get a good vibe at all, so I rejected the application. BTW, @Kyle J. agree with everything you said. Thank you!

When it comes to tenant screening, I usually always follow the best practices. Income 3 times rent, no eviction (ever), no major criminal background, good rental history and references, decent credit etc etc. I am currently in the process of renting a property. A couple that has applied - boyfriend has a good job, good credit, good rental history and no criminal background - an ideal candidate. My tenant screening company gives him a score of 94 out of 100. Girlfriend also a decent credit, a decent job and no criminal background, but she had an eviction 2 years ago (was not living with the boyfriend at the time). Tenant screening company gives her a score of 82 out of 100. Now any other time I would automatically reject a candidate for having an eviction, but I am thinking if I should reconsider given boyfriend's financial background. What would you do? Any advice would be appreciated. BTW, this is a nice property in a nice area, and I am getting a lot of interest from other candidates, so finding another good candidate probably would not be an issue. 

I'm in!

@James Wise & @Marc C. Thank you so much for your responses. This is the exact discussion I was hoping to have!

Regarding 50/50 equity split, let me share little more details. My friend/potential partner has no interest in being actively involved in the process. We are likely to have a JV in order to avoid SEC registration requirements as discussed in this thread, but I know he wants to provide the down payment and expects me to handle everything else before and after the purchase of the property. I mentioned he would also come up with the reserve money, but we can structure the deal in a way so that he is paid the reserve money back fully first before we start splitting the cash flow.

As for my part, I will be sponsoring the deal, therefore will be bringing in 80% of the funds (hoping for 80% LTV) I realize that it's not my money, but I am risking my excellent credit if something goes south with the deal. My friend is cash rich, but cannot quality for a loan on his own (different story). I also bring residential real estate rental and property management experience, which he lacks. I will be doing ALL the legwork that includes developing relationships (including with commercial RE agents), building a team, figuring out all the legal issues, finding and acquiring deal and hiring/managing a property management company once the property is acquired among other things. Any cost beyond down payment will be split between us. Given I am doing ALL the work and am bringing in majority of the funds, I think it's reasonable that we split 50/50 or at least that's what I would like to propose to him initially. Any thoughts? I don't know 15% to 20% IRR is possible for him in a deal structure like this, but I figure it will depend on the quality of the deal and our exit strategy. We are both interested in long term partnership, so don't think it will be a big deal if the first deal doesn't provide ideal returns as long as we learn from it and apply the knowledge on the next one.

James, yes we are planning to use RE agent to find the property.

Marc, unfortunately I don't have a mentor yet, but am working on finding mentors as soon as possible and also acquire some formal training (beyond books and free content) on apartment investing early next year.

@Jessica Zolotorofe Hi Jessica, thanks for the information. I have sent you a PM.

@Joe Fairless

Thank you so much for your reply and also pointing out SEC registration issues with having a passive partner. I don't think either one of us will have any issue with doing a JV. Do you know where I can find out what goes into a typical multi family joint ventures agreement? Obviously we will be making modifications based on our own specific agreements. Should I get in touch with a real estate attorney who deals with multi family deal structuring? Thanks for any information on this.

Friend of mine and I are trying to form a partnership relationship hoping to acquire a small multifamily property (20 units or fewer as long as price is $1 million or less).

My responsibilities:
1.  Will be sponsor and responsible for obtaining loan on the property.
2.  Will be responsible for finding, analyzing and acquiring deal.
3.  Property will be managed by a property management company. I will oversee the property management company and also make any day to day decisions as needed.

Friend responsibilities:
1. Provide cash for down payment. (and possibly some fund for reserves – details yet to be worked out)
2. Silent partner

This is a very high level view of the partnership. Most of the details will still need to be worked out. I am thinking 50/50 equity partnership, which I think would be acceptable to him as well. Does this sound reasonable? If not, then what would be a reasonable split? If the initial property works out well, we are planning to do more deals (hopefully bigger and better). Please let me know your suggestions/thoughts.

@Matt H. Thanks for great information here! Do you usually find that portfolio loans are mostly provided by smaller local lenders (i.e. community banks) as opposed to regional or larger banks?

@Matt H. Great advice! I haven't really looked into all my options. I need to start doing that! Do you do one portfolio loan per property and bundle them? The reason I shy away from portfolio refinancing because their terms are not likely to be nearly as good as I got with my current conventional loans. May be it's time to see the bigger picture!

@Matt H. Experts can weigh in here, but I believe according to Fannie Mae guideline, one is not eligible for cash out refinance if he or she has more than four financed properties (unless refinancing is done within 6 months of purchase date). Unfortunately I fall into this category. Lot of my fund issues would be resolved if I were allowed to do cash out refinance! :)