All Forum Posts by: Erin Onsager

@Account Closed - I just sold it in March.

Thanks everyone for the feedback!  @Kyle Chadwick, you hit the nail on the head.  Everyone wants to make money, no one wants or knows how to put work in (which is fine, I'm willing to), but by partnering with them, my costs go up simply by virtue of having to file more complicated tax returns (for both the partnership and me personally).  I could let them lend me money, but when they hear that I make a 30% cash-on-cash return on a property and I'm offering them 4% (because rates are low), the economics doesn't benefit them as much.

@Nathan Gesner charging for my labor is an option for sure and something I could consider.  I like the idea of their putting in more money and then my doing the work and our splitting the profits 50-50.  I'm going to let that marinate.  And @Chris Freeburg, I'd love to connect!  Thanks for the recommendation.  :-)

@Kyle Chadwick I've found all but one of my properties on the MLS. I hear about people on Bigger Pockets finding off market deals and just don't know how. Wholesalers here charge WAY too much, but I find good deals on the MLS. I also find a property, type the address into Rentometer.com and then immediately know that I can charge slightly higher than what the highest price listed is. I also tend to buy mostly turn-key properties (I usually re-do carpets, paint, and maybe add an egress window if needed, so around $10K of work). I tend to get my places rented with a few days of listing them, but the Denver market is pretty hot, so I've been lucky and have taken advantage of that!

Also, generally, happy to consider partnering with anyone!  I just need to figure out a structure that is fair to me and my partners.  Thanks for all the feedback!

I've been investing in real estate mostly in Denver (single family homes).  I've been lucky in that I now know the market incredibly well, and usually net $1,000-$1,500 per month per property right out of the gate.  I've recently shared my successes with family and a few close friends and I think I've been doing this long enough and have proven myself that now a handful of people have expressed an interest to join in and also make some money (I don't blame them!).

Previously, I formed a partnership on a property with my cousin - it was my first partnership and I was trying to get her into real estate and take her under my wing, so we did a 95%/5% split and did everything pro-rata.  This was a great deal for her as I did all of the work and she just reaped the financial benefits.  It was less beneficial for me as all of a sudden, I had to pay more to form a partnership, and then pay more in taxes (to file a K-1 every year), and was spending slightly more time keeping the books and paying her her fair share every month.

My question is - going forward, I'd like to be open to partnerships with friends, family, and maybe even strangers, but I want to make sure I'm getting paid for my expertise and my work.  For those of you who are in partnerships or have created partnerships, how do you structure your terms?  I've contemplated doing a promote - where both partners get a pro-rata return on their investment until their original equity is returned and then having 60% go to me and 40% to my partner.  I want to be fair to those who wish to invest with me, but I also don't want to sell myself short and over-extend myself as I realize that the knowledge that I've acquired over the years of investing is valuable.

Thanks in advance!

@Stephen Torti I did not go with Lyon as they unfortunately do not allow you to cherry-pick what maintenance items you want to take care of on your own vs. have them handle.  They are an all or nothing management company, which surely works well for many owners.  I prefer being a bit more hands-on though, so that approach doesn't work for me.

@Fan Bi, sadly no.  I wouldn't invest there again, but will give the caveat that I wouldn't do it BECAUSE I am an out-of-state investor.  I live in Colorado and make it to my property twice a year, but prefer to be much more hands on than distance allows.  I've found management to be much more expensive than I'd have thought it to be, and I've had a few tenant issues that have been frustrating, to say the least.  I was eager to invest out of state for a variety of reasons, including, but not solely because of advice I'd read and listened to on Bigger Pockets.  I've found it a lot more difficult than any podcast would have you believe.  You need a rock solid management company who offers personalized attention to detail, and that's hard to find, frankly.  I also own a small handful of properties in and around Denver (where I live) and that's all been a breeze (the odd tenant issue notwithstanding) and financially very successful.  When I eventually sell my Pawtucket property, it will be my last investment in the area and I will only invest locally henceforth.  That's just me though... I'm sure others have a better system for out of state investing than I do.  That being said, I'll be looking to sell my 3 unit building in Pawtucket in a year or two... :-)

@Justin Allison, I went with Nexus Property Management.  They were cheaper than Lyons up front, which is what swayed me (8% vs 10% fee).  However, all the maintenance trips are costly.  Luckily for me, my neighbor ended up being amazing and taking over most of the maintenance for me, which has been a HUGE savings.  I was going to switch to Lyons almost a year ago, but they are an all or nothing shop.  They won't let me cherry-pick which maintenance items they do vs. what I do.  Given that I'm a bit more hands-on, I like that Nexus doesn't care if I use them for the repairs/maintenance/etc or if I hire it out on my own.

Awesome; thanks. That's helpful. I'm not trying to refinance my FHA loan, just explaining why we can't change ownership (due to it being an FHA loan - which we were able to obtain because it is owner-occupied). It's a unique situation, but all of that makes sense and gives me more comfort in just changing ownership.

Thanks!

@Andrew Postell

Right; that is what I'm asking. But, the loans all have clauses that state that the legal owner of the property needs to be the same as who is on the loan. I have one property that is a bit unique. It's an investment property with my cousin and I. I own 80%; her share is 20%. She is the tenant (so we got owner-occupancy FHA financing). I can't change the ownership of that because Freddie Mac requires that the owner of the property be on the loan. Take my cousin out of the picture and that's my issue for all my other loans as well.

I've been buying properties in my name and financing them in my name (to get more favorable interest rates). I want to switch them all to LLCs, but my current loan documents prevent that. How does everyone deal with this? And what type of financing do you get for a property in a partnership? I've got one deal financed through my LLC, but it's a 5 year loan that amortizes over 25 years. The rest of my loans are 30 year fixed.

@Lucas Mills, I'm surprised no one proposed being an equity partner in a deal. I did my first joint venture deal last fall and we did a BRRR (missing that last R - repeat :-P). After 9 months of owning the property, we had over 20% of our money returned to us, which is a great rate of return. I'm surprised no one suggested that you partner with someone who wants to do the deals (like me!) but who is always seeking sources of capital.

My goal is also $5k a month in passive income, and the thing I'd say is that while I'm not there yet, it's amazing how the growth is exponential.  The power of leverage is one of the most powerful tools you have when it comes to making money.

I would not advise going back to school to try to eek out a few more dollars per hour in your W2 grind, but rather think creatively about how to work smarter, not harder.