All Forum Posts by: Jaiden Olsen

I am currently under contract on a seller financed 6-plex in Ogden. The deal is good, and has potential to be great! After down payment, home inspection, warranty, due diligence, closing costs, etc. total initial investment is $14,000. I can take this money out of my savings account and HELOC and strap myself down pretty tight financially (but I could do it). But I have an opportunity to partner on this deal with a relative.

Since I'm already under contract, what options do I have to structure a partnership?

The way the deal is working, the seller and I will set up an LLC with each of our individual LLC's as members. This is what I'm thinking and I'd love your feedback!

I am going to establish a partnership agreement and a new LLC with my partner who is bringing the $14k. That LLC will be the member of the LLC set up with me and the seller.

I'm also wondering how I should structure the partnership; Annual returns on my partners money, equity in the property (50/50 split or 20/80 split etc.). 

In my in-experience, this seems complicated. I'm hoping that I can get a good idea as to where I should take this from the BP community before taking it to my attorney. 

Looking for local feedback: Salt Lake City, Ogden, Weber, Davis, Utah.

@Jared Smith, Looks like you have found a pretty good deal! Congrats! One thing that it looks like you forgot was insurance. When I'm analyzing a deal, I estimate $800/year insurance, 5% vacancy, 10% property management, and 10% repairs and maintenance. I think that it is also important you ensure that you have some significant capital reserves as well ($10k per door for SFR's). I have found that often those major expenditures can be planned for, and should be accounted for in your calculation as Vincent pointed out. Based on my numbers, I'd estimate that you would be cashflowing at $335/month for the first year for a Cash-on-Cash return of almost 10%. Depending on the location and market, I'd say that could be a deal.

Hey Biggerpockets! Salt Lake City is one of two cities still on the list as a potential host for the 2030 winter Olympics (See article). Aside from all of the growth that is currently going on in the Salt Lake and surrounding areas (including Weber, Davis, and Utah Counties), what affect would this decision play in the real estate market?  Salt Lake City stands out as a potential candidate because many of the required facilities are already in place. Many people believe Salt Lake City would have to expel relatively little effort to host the Olympics again. Not to mention the fact that Salt Lake City was one of the only host cities in history to make a profit from hosting the Olympics back in 2002. I think that it is a great option and would love to see the Olympics come to Salt Lake again. I wanted to start a discussion to see how real estate is affected by massive events like the Olympics and what other people have experienced in the past, not only in Utah but other areas of the US. In what ways do people anticipate these events, and strategize to maximize their returns. I know that vacation rentals (airbnb, vrbo, etc) would be a great place to invest during that time, but I feel that there are potentially more profitable ways to invest in real estate in the  years preceding large events like the Olympics. I know that there is so much that can change in 12 years, but I don't think it is too early to start a discussion.

I grew up in Central Utah (Manti, to be specific). I would love to invest in those small rural areas, if for nor other reason, than I love the area. Something that has always steered me away from those rural areas, is that the economies rely SO heavily on single companies, industries, etc...

A bad example that I could give you is Delta, Ut. Delta is a small rural Utah community (pop. 3500) that relies heavily on the power plant for employment. The power plant recently announced that it plans to convert from a coal fired plant to a fully solar plant by 2025. Some estimates guess that this change will cause 500 people to lose their jobs. This is a HUGE deal for delta, and will likely ruin real estate growth potential for a long period of time.

On the other hand, there is a lot of profit to be had by renting to the salt of the earth people who work those hard jobs. Many of those people are long-term renters, and will take great care of the place. CAP rates are higher, returns are typically higher, and risk is a little higher. All in all, I don't think it is a bad investment, but until I have more experience, I won't be investing in those small rural communities.

Chuck, 

Hope to see you at any one of these!

https://slreia.com/lunches/northern-utah/

https://www.nureia.org/

https://www.meetup.com/NUREIA/

Good Luck!

@Kaden Murdock, Welcome to BP and you've come to the right place! I think @Cassandra Burton is right when she says it's important to start somewhere. This is my opinion: something that we newbies have to realize (especially in the Utah market) is that making a deal isn't just about cashflow. A lot of these guys making big money buy a properties that barely break even or even lose money right out the gate. They are able to justify this negative cashflow, because all other aspects of the investment are excellent (Loan pay down, market appreciation, tax advantages, etc). I'm not saying to be reckless with your hard earned savings, but the most important thing is to start somewhere! Trust your gut, make sure the deal has a promising future, and make sure that you are taking the necessary precautions to buy in the right place. Don't get caught up on the cashflow. I was given this advice from a very experienced, high net worth, investor in the northern Utah area. 

There are always deals being made, and if the numbers work, and you are willing to hold on for the long haul, there is never a bad time to invest.

Utah is an excellent market. If you are in need of an excellent property manager, look up Cody Reeder with Reeder Asset Management. http://www.reederproperties.com/.

Good Luck!

-Jaiden

@Carter Hatch, Congrats on your first deal and welcome to bigger pockets! The road is wide and there are always new deals being made. It's about hustle and drive. Get it done!

St. George is one of the fastest growing areas in the US. I think it is a great place to invest! Welcome to BP and good luck!

Bill Miller, CPA
www.B2acpa.com