All Forum Posts by: Jerry Cima

What is a typical split for a partnership where 1 party is financing the entire operation & the other party is managing it?

The goal is to BRRR a ~2K sq ft duplex. To be more specific, we're not necessarily looking for one that needs a rehab, a unit that requires cosmetic fixes would be great as well. We do anticipate to hold the unit. 

I understand it can be whatever you decide on, just not sure what to propose to the interested party. 50/50? 70/30? (they get 70)

Originally posted by @Jason D.:

@Jerry Cima hard money loans are almost all interest only payments, not a 1 year term loan. So you'll just pay the interest until you refinance and pay the loan back.

Ok, that makes much more sense to me. Thanks!

Originally posted by @Kyle J.:

@Jerry Cima It’s pretty common for short term hard/private money loans to be set up for interest-only payments. An interest-only payment on a $125k loan at 10% interest would be $1,041.66 per month. 

Thanks! I searched for this for quite some time but was unable to find the answer.

You get a hard money investor willing to loan you $125k at 10% for a 1 year term & origination fee of 1%. Doesn't that mean that within the first month you need to pony up 1.25k for the origination fee & about 8.8k for the first "mortgage" payment? Then another $8.8k every month after that till the repairs are done & you get the home refinanced by a conventional lender?

Just wanted to see what sort of agreements were typical between an investor & their private lender? I know each situation is different, but i want to be able to present different options to investors. I'm looking to buy duplexes in most conditions (needing a full rehab to needing minor cosmetic work). I plan to hold them & collect rent, but I'm not opposed to selling it as a flip.

Right now i plan to offer an investor a 9% interest on his loan plus an origination fee of 1%. Another investor wants to be more "involved", i was considering offering them a lower interest ~5%, longer duration & a split in any profit from rent & profit gained by selling.

1) What loan duration's are typical for a private lender?

2) Do you refi with a conventional mortgage after the place is rented or after repairs are done? & are issues refinancing usually an issue?

3) In a lower interest & split profit sort of deal, what % split is normal? I'll be doing all the work.

4) Has anyone ever used a syndication structure with 3 people?  Acquisition fee for me, Investors get preferred return, then we split the profit. 

Are all sellers in NY required to provide a property condition disclosure OR a $500 credit at closing? When purchasing my own home, the agent made it seem like this was a requirement (the disclosure or the money). What if i am buying a home from an individual off a lead with no banks involved, just private money. Is this still a requirement? Is it better/more ethical to inform the seller of this before agreeing on a price?

Originally posted by @John Underwood:

This is completely up to you and your mentor.

Offer to buy him lunch at meetings. Come prepared with questions so you can get everything answered and not waste the guys time asking stuff you forgot to ask.

Ask him what would he do if he were you.

What would he do differently if he could go back and do things over?

 Thanks, these are great points! 

Originally posted by @Daniella Sanchez:

I partnered up with a seasoned real estate agent over 2 years ago and she is now my full time partner. When I reached out to her (I had seen her winning awards at the managing broker's office I wanted to join and she has over 40 years in real estate), I could tell she was hesitant but open to mentoring me. 

Heres what I did:

ENTHUSIASM AND INITIATIVE. They want to FEEL how badly you want to learn. Remember they are practically doing you a favor especially if they are very successful, time is money, and if they feel it is time wasted they'll be the first to walk away. 

I was always offering my time and effort. If she mentioned an open house, I'd tell her I can host it. If she was considering a new home organization flyer, I'd be first to say let me get some templates together. "I read this great article with some unique tips I think we could share with your clients." You get the idea... 

Every single one of these moments you are learning, so take advantage and show them how much you want to learn. 

ASK QUESTIONS. Again this goes with the first point. It shows them you are genuinely interested and they will be attracted to that. 

BE YOURSELF. Be your authentic self, whether that be silly, curious, bubbly etc. Don't try to win them over with fancy words when you email them or talk to them. They will most definitely be turned off by wannabes. 

Overall idea. Think of this as not only a course in education but you get to make (hopefully) a long lasting relationship out of it. Be humble yet confident. And REMEMBER, if YOU don't feel like its a good fit, YOU CAN WALK AWAY. It's important you find someone you connect with and the feeling is mutual.

Thanks, that is a huge help. I've been reading & leaning about real estate investing nonstop for nearly a month now, I'll make sure i communicate how much time I've been putting into it and how much i want to be successful in this field. I'll also plan to ask what they are working on now, & see if i can fit in to provide some of my time/assistance so show I'm serious. Thanks again!

Soon I'm goign to be connected with a potential mentor, & I'm trying to get a feeling for what the relationship should be like. I have a bunch of general questions for them (general & specific). What are my duties/ what should i offer them as an apprentice?

Originally posted by @Alina Trigub:

@Jerry Cima

It is all of the above. Most investors prefer to use OPM (other people money), but these don't come in many shapes or forms at the beginning of your journey. Hence you need to gain the experience and show the track record to find more investors down the road. 

Best!

That makes sense, i have a feeling answers are going to be all across the board.