All Forum Posts by: Franco Li

Tell them the truth! You shouldn't shy away from them but you should let them know the risks involved from your perspective - i.e. Illegal businesses, money laundering, etc. Aside from the asset itself, the most important for you is to find someone who will keep your property in good condition, is qualified to pay, and won't tangle you in any troubles. Good luck!

I would go back to her and ask what prompted her intuition that these individuals are unkindly. If you can squeeze some more months out of these guys, it might be wise to do so but if they are indeed a bit sketchy, it probably just makes sense to evict, renovate, increase rental prices, and wait for someone you're more comfortable with.

It will be difficult to describe this without a spreadsheet but you can do a straight line amortization - i.e. principal/(12*30) - and look at it like that. Otherwise, you can just use the pmt function in excel to give you a generic monthly payment depending on interest and principal size. Look up how to use a pmt function and play around, im certain there are a number of spreadsheets online already. Btw, if you do an IO and balloon in 5/7 years, even better, you just have to calculate interest payments!

If you, in your soul, don't think this property is worth it then don't bother! Remember, there are plenty of fish in the sea, and if it gets too expensive, you'll be in a very bad investment! If they are willing to walk away from your final and best, then onto the next one!

This is a common question with almost as many answers. Some folks like having the LLC for taxes (if any) or just the benefit of remoteness from your finances. Regarding the latter, I have been told on many occasions that as the ultimate economic beneficiary and sole owner of the LLC, a lawsuit will still pull you and your assets in the loop. Still, having an LLC can shield you from having your name and information out there while you source lessees. Good luck!

You can form an LLC like others have suggested but any form of equity means they will share ownership in the property - so this becomes more like a partnership than a lender-borrower relationship. If you don't have enough money to pay the down payment, you should try saving up first because even if you secure a loan with a lender, they look at the source of your funds and won't like your lack of liquidity and savings ability. If you can secure the full purchase price from your friends and family, then perhaps structure something where your strategy makes sense. Are you betting on property appreciation or are you cash flowing? Friends and family won't like their money amortizing over 30 years, so see if they can do a 5-7 year balloon, at 5-10% APR (match an equity index, and just to be frank, hope they know nothing about investing) and that might work. Good luck!

As long as you get proof of the balances and ongoing transactions, it shouldn't matter. Good luck!

@Jonathan Santa Read as much as possible and crunch as much numbers and opportunities as you can!

So as an investor you'd actually want some leverage. All-cash is actually not a good idea, since you won't be making as much per dollar that you invested. If I were you, I would see if I can afford a 15-20% down payment with surplus (lenders require liquidity), then crunch the numbers and understand the necessary expenses to make sure this place is cashflowing. Also how much of a discount would you be purchasing this property at? First course of action is understand the investment potential and understand your own financials - knowledge is key! Good luck. 

I think typically you'd provide the laundry machines (if applicable) and a fridge. I think AC units and dishwashers are a bit much....