All Forum Posts by: Tom Spaeth

1. Purchase price : 195,000
2. Rehab : $310,000
3. Sale: $690,000
4. Closing Costs about $30,000
5. Interest: $26,000
6. Profit: $115,000
7. I took home $75k after giving $40 to an investor in the project.

This was a large project. I took a 750 foot house and tripled the size with an addition.

I've heard great things about Appfolio. (For the number of units you have)

Paying off credit is always a great idea. This is a true case of freedom in the works. Since you say you need to repair credit you are likely not the best candidate for traditional mortgages, and the down payment may put you further in debt. 

But don't let that stop you from looking for investments. A wholesale transaction could pay of debt quickly. An owner financed rental could bring in extra monthly cash flow.

This is not a zero sum game. Look for what can move you forward in your situation.

You seems just a bit paranoid about the SEC. You can partner up with anyone you want and neither of you have to actually take salaries or any of that. An LLC is an agreement between one or more persons to run a business venture. The SEC does not get involve nor regulate such activity.

That said do not go and try to get people you don't personally know to invest in a venture with the PROMISE of future returns. Think selling a stock kind of a position. Having someone provide you a mortgage on a property goes into the gray area here but doubt the SEC will come looking for you as long at the Note is secured.

Now if your plan is to have multitudes of people invest in the LLC so you startup some big fund to do flips - Then you may want to talk to an SEC lawyer. CPA no good - Your need the lawyer.

My thought is think joint venture. Each project can be it's own independent opportunity. And you have the ability to reevaluate after/during each project. Sometimes partnership seems to indicate a joining of forces for a longer period of time. A true partnership is easier to get into than out of.

There was nothing magic here. Every once in a blue moon I would call the owner. I knew she had to sell one day but she did not have an immediate need. The house was full of stuff and they would not sell till they moved it. Finally one day I think the family just decided it was time. I think the neighbor is in the same place no immediate need just the knowledge they need to do something. 

I am looking at expanding my investing into Chicago and northern Illinois. Spent 20 years there and moved west for a while. But my current market is pretty tough. So I am looking for an investor friendly real estate agent in the area to work with. If you are one or know send me a message.  Thanks

@Jake Silcott

The payout issue depends on your relationship with your lender/investor.

1: If you are good with money and honest just take all the money now, put it in the bank and use it as you go along. This put a lot of faith in you as the rehabber. And you also have a fiduciary responsibility to watch their money, Think fraud if you walked away without doing the work.

2: Have the investor hold the money. Supply them with a draw sheet when you require the money. This relies on them having the money when you need it. Some hard money lenders accidentally don't have the money for your project until their other borrower pays them back. 

3: Have the title company hold the funds in escrow. You supply them with a draw sheet and they issue a check.

And for 2&3 you just need to determine if the investor requires an on site inspection prior to release of funds.

Best of luck.

I got my title company to send me a note that I could modify. Then I type in the relevant info. And then let everyone review it.

Option 3 (I think): I would not do number 1 as it is to much paper work and accounting. Best to just issue one note for the whole process. That way the lender/investor gets paid out on the HUD at closing. Unless the investor is responsible for other things during the project they are really just a lender with a special payout. No reason to complicate the issue. This is very similar to the process a hard money lender would use. Just put your terms for this deal in the note.