All Forum Posts by: James C.

My Name is Jim. I'm currently teaching in Korea, but have my home base in Space Coast, Florida area. From 1993 to 2000 I was a Real Estate agent, and owned two companies, one property preservation, the other a note purchase company (NPN, PN, RPN, & REO). I've been involved with most every property type out there, except for heavy duty industrial, and towers. After that, I worked in the CREL department (Commercial insurance, and draw manager) of a now defunct bank. Once the bank went bust, I went to work for a wall street firm in their bonds department. I also have an MBA, with a concentration in finance.

Teachers don't get paid much, and with a bunch of experiences, I'm now at a point where I need to generate cash flow for retirement. I've got about 5-10 years to get this done... so it's going to have to be more aggressive than the average bear. I'm on BiggerPockets to refresh my skills, learn new techniques, and make deals!

Autumn,

This sounds like it's a tough go from an fix/flip or acquisition/rent  angle. What about being a lender/partner on the property? 

Before anything else, find out what it's going to cost to put it right... and where you can cut corners... this is where your contractor is most helpful. If the property is being prepped for rental instead of fix/flip, then your rehab might be less.

Option 1) If she owes 221K, and it's 40K to fix then the total in is 261K. If the ARV is 300K, then your at 87%CLTV. The 261K question is "Can it be rented to cover the total payments?" If the answer is yes, then that might be a viable option. I do realize that it will be difficult, if not impossible, for the property to positive cash flow. If no.... then:

Option 2) Sale. You can split about 20K, so you put in 40K, and get back 10K (I am assuming a 300K sale, a 6% commission, and 50% split of profits). You could arrange any split you both agree to. Your return would be about 10K/40K = 25%. If you had to take a cut to 20% it's still not awful. 

If your goal is to build trust, and "pay it forward" this might be one way to get there. I would consider going over ALL the options you can come up with... educate your friend. Brainstorm possible solutions with her, you learn more by teaching someone else, and she will have all the information to make an informed decision.

Good Luck!

Jim