All Forum Posts by: Farhan Abbasi

Hi, I run an STR management company, and I've come across a pain point for one of my clients (let's call him Partner A): One of is his partners (Partner B) wants to sell the property, but Partner A prefers not to. They received a "low-ball" offer and are in disagreement. I am wondering how I can create a win-win-win, where all parties are satisfied and I can stay on as manager.

BACKGROUND INFO:

Property: An urban condo in a building that allows STR (rare deal). My company also has City approval (hard to attain, it goes with my company, not just the address).

Owner: Ownership and mortgage is under Partner B's name. He must have an additional agreement with Partner A. 

Goals: My goal is to stay on as manager, whether with the same owner, or new ownership. Partner B's goal is to exit the deal. Partner A's goal is to stay on as part-owner. He envisions have a new LLC become the owner after Partner B exits.

IDEAS:

1) I or an investor I find, replaces Investor B in the deal. This would satisfy all parties and secure my company's place as a manager. The mortgage would have to be guaranteed by Partner A, ideally with an LLC representing ownership on the deed.

2) Negotiate an "installment sale" of Partner B's interest, where Partner B stays on its own mortgage and pays it via the installment sale proceeds. 

Any thoughts? Any other ideas? Please skip over the "risk factors" and jump to what you've seen done.  

PS: Not an offer to invest. I won't be disclosing the market or address.   

Hi @Thomas Gagnon and others who contributed: I am visiting Holyoke on Wednesday to tour some properties and meetings my partner has set up for us. I was wondering if anyone is interested in meeting to discuss their experiences! Of course meals on me, and I would be happy to involve you as an investor if you end up being interested.

To those who can't meet - would be great to get your thoughts on this town at this point. There are some areas of economic growth expected - wondering if you disagree.

Hi @John Sheridan and others who contributed: I am visiting Holyoke on Wednesday to tour some properties and meetings my partner has set up for us. I was wondering if anyone is interested in meeting to discuss their experiences! Of course meals on me, and I would be happy to involve you as an investor if you end up being interested.

To those who can't meet - would be great to get your thoughts on this town at this point. There are some areas of economic growth expected - wondering if you disagree. 

Hi @Danielle McKahn, and others who contributed: I am visiting Holyoke on Wednesday to tour some properties and meetings my partner has set up for us. I was wondering if anyone is interested in meeting and discussing their experiences! Of course meals on me, and I would be happy to involve you as an investor if you end up being interested. 

Also, would be great to get your thoughts on this town at this point. 

It's former ie $10K in 90 days. Which is pretty outsized. If it was the latter ie 20% APR then I would keep it in there all year.

@Caleb Heimsoth, it's probably a highly leveraged investment. They will use the Class A funds (me along with others) plus with an unspecified equity amount (Class B) into purchasing the asset ($250K), and the rehab ($80K) will be a bank construction loan. 

My investment is technically into the general fund, so I'm not specifically tied to this deal, but I would have a debt claim against the general fund that is doing flips. 

I'm offered an investment offering outsized returns (20% preferred return over 90 days), and wondering what I can do or ask to determine whether it's a poor choice of investment. I already expect responses of "Unrealistic, move on." It would be helpful to offer concrete tests/research points. I have prior experience in real estate, am in the world of finance. The Sponsor's employee that is handling the raise is a friend and we're undertaking a different business together (so he has incentive to not screw me over). 

Here's the deal:

- SFH in a suburb of a major city with great fundamentals (job growth, population growth, multiple sectors).

- Purchase: $250K (presumably funded by Class A & B shares).

- Rehab: $80K (100% bank loan)

- Sale: $460K ($130K profit)

- Deal is owned by LLC (seems like a general fund LLC for various targets), not an LLC specifically for this deal.

- Payout: Upon sale and paydown of bank debt, Class A shares get their principal, then Class B shares get their principal, then Class A gets their 20%. 

- The Sponsor isn't taking a management fee (I presume they are majority owners of Class B).

I would be investing $50K into the Class A shares, due in 90 days. Principal + 20% (ie $10K profit).

@Kevin Lefeuvre - thanks for the link and wonderful suggestion. I went ahead with buying 2 of these and if they work well, I'll get 5 more for other properties. Chose this one that actually has a 14 day record, no cloud fees, and goes to Amazon cloud: 

https://www.amazon.com/Wyze-1080p-Indoor-Camera-Vi...

Only downside is it stops recording after 12 seconds. But that should be enough to identify whoever came in/out in case of trying to determine who did damage, brought in unauthorized guests, etc. 

Has anyone had experience with either:

1) Legalizing a Basement unit through the Boston Zoning Board of Appeals?

2) The ADU pilot program?

I would love to hear from your experience. 

@John D. Having done property management and short-term rentals for as long as I have, there is wisdom in allowing for unforeseen circumstances, and allowing a buffer of time for one to act on it. A guest staying 3 months may not report damage done herself, for example. A legal action may occur months down the line requiring you to find evidence months in the past, etc. etc.