All Forum Posts by: Jacob Simpson

Thanks for the feedback, @Christopher Smith! That's another thing I'm looking for: any pitfalls to avoid early on in a partnership. I really do believe my potential partner is an honest guy who wants to do right by me, but it is an unfortunate reality of our world now that contracts are the language of business!

@Steve Morris, I will definitely engage an attorney for any long-term agreements. I was hoping this was something that others had dealt with and might have some insight on a one-off project. Thanks for the feedback!

I've just completed paperwork to open a HELOC on our primary residence. I have a local REI who is in the middle of his 7th and 8th flip. I feel comfortable with his project management skill and ability to evaluate properties. We've verbally agreed to do a deal together, with me providing the money and him taking care of the project side. We agreed to a 60/40 split on profits, with the larger share going to me. We want to just do one deal together at first to see how well we work together.

I know we need to get something in writing to formalize this, but I don't know where to start. Does anyone have a Memorandum of Understanding, a Contract, a template, etc, that I could use for a one-off project and also something more permanent if this ends up working out? I'm open to suggestions. Thanks in advance for your help!

@Tryston Erwin, do you have an agent and/or property management company on your team yet? An agent can help you determine a good ARV in your market, and a good property manager can help you determine where the rent should be. If nothing else, you can call local property management companies and ask them for a list of available rentals so that you can see what average rent is there.

@Kandice Manciel, are you looking at this for a house hack, or as a pure rental property? The numbers are very attractive, although I agree with @Brad Hammond that you should have something in the budget for repairs, even if it's just $1,000.

@Ari Hadar, this is the header on the report when I click on "View Report". 

@Ari Hadar, I'm not seeing the 39.4% CoC in the report. Report shows 6.7% ROI before Cash Out/Refi, and then 13.6% after, which seem to match the numbers in the report.

@Paramvir Singh, I agree with @Jarett Engdahl. A 13% CoC return after you cash out isn't worth all the time, headache, and risk. With a little patience you could probably buy a rent-ready property with nearly the same return in the Cleveland, OH market.

@Artem Shum, You need to be able to calculate or estimate your ratios quickly when you are analyzing a deal. You won't always have time to get back in front of a computer to run the numbers. High level I can see that your Rent/Purchase ratio is above 1%. I'm not sure what is typical in your market, but that's not a terrible place to start. Assuming all the expenses are accounted for and you are paying Closing Costs out of pocket, your Cash-on-Cash return appears to be around 15%, which is pretty good.

I would take another look at your Principal and Interest calculation. $96,404 principal @ 4.3% for 30 years comes up to $477/month by my math.

@Artem Shum, I can see your assumptions in the spreadsheet, but I don't see your "Go/No-Go" metrics. What is your opinion of this deal? What is your analysis of it?