All Forum Posts by: Jon Allen

How much cash do you have in the IRA? Have you made any other IRA contributions this year? You can make a $5,500 contribution for 2018 and in a few weeks you can make a $5,500 contribution to the IRA for 2019. That gets you kilos of the way there.

If you’re asking here then you could probably benefit from the free help a buyer’s agent could provide. Is it just that you don’t want to bother an agent to put in a bunch of offers for you?

Think about your agent’s business the way you’re thinking about your own real estate investing. A screaming deal for you, where you want to invest your time, is a no brained deal at 75% of market value where you walk in and are making strong cash flow from day one. You’re selective and willing to look around because you know not everything is in your wheelhouse and you’re not willing to just give away your money to the sellers. Why shouldn’t your agent have a say in how he spends his time (which to him = money) and focus on the most profitable activities in his business - finding clients and getting deals closed. A dream client for him is one who is qualified, flexible, motivated and willing to pay market. Within the scope of any particular deal he’s obligated to fight for your best interests but in expecting him to happily submit a dozen or more unrealistic, low ball offers you’re essentially asking him to diminish his profit (tons of time with you in exchange for a single commission) so you can maximize yours. Not a good deal if he has other possible uses for his time.

Maybe your numbers are wrong. Do you literally mean cash flow negative near the asking price or just not at your target? If the market is telling you what those properties are worth you can’t change that by asking to pay less. Seems to me you either need to invest in another market that fits your investment criteria, resign yourself to paying market prices locally or buy distressed and add value. Or get an agent who doesn’t mind submitting a million offers for you. Yours wants to do something more profitable with his time.

You’re wholesaling the Lease Option? Then yes the option fee is your payment. Take the focus off the fee and run the numbers for the seller on a straight sale vs a LO. Deduct a selling commission and seller concessions on a sale. Add rental income on the LO. Bottom line though is that if it’s a house that would sell easily at full value and the seller needs the $ to go put down on another house they’re probably not right for you. You may need to do more fact finding on the seller’s situation to focus the conversation on how you can solve their problem.

If you have a JV agreement with her and don’t see an easy out, why would she agree to modify it so that she ends up with less money? Does she have any incentive to do that? Doesn’t sound like it but you would know better. That’s why I suggested threatening to torpedo the purchase - that becomes her incentive to negotiate. If she expects to clear a few hundred a month under the deal indefinitely and get half the appreciation in the property I would think the finder’s fee might need to be substantial. Once you determine that number you may need to think about whether to buy this thing at all. Best of luck, I’m sure you’ll work it out.

Do you have a signed JV agreement? Look to the termination rights under that agreement, if any. Is it a year-to-year JV? Maybe try it for a year and see how it goes. Can you avoid closing on the property, making the JV impossible? Better yet, can you convince her you’re going to refuse to close unless she agrees to modify the JV agreement?

I think the way to do that deal is for you to own 100% of the deal, including appreciation, and for her to be your tenant at an above-market rent. She Airbnb’s it and keeps any excess cash flow. Above market rent is justified by you allowing her to sublet it and the increased risk of lots of different people in the property. And if it’s going well and her take is still above an STR property manager you don’t renew her lease and just run it through them. Without you she doesn’t have a business - not a ton of owners would let her do this - so going 50/50 on everything is too good a deal for her in my opinion.

His message is designed to groom potential investors for his non-accredited fund offering, as hopefully a sort of feeder program to his accredited investor offerings.  He says you can't make money in single family because HE makes money selling you interests in large multi-family.  People make millions in all aspects of the real estate industry. If you listen to him, just stay cognizant of the fact that everything he says is designed to remove whatever objections you may have to investing with him. If that's the right path for you, go for it.

@Lindel Turner it sounds like you DID lose because you could have gotten the same rent for 33% less capital, leaving more for your next investment. Just because it cash flows doesn’t make it a win.