All Forum Posts by: Jon Catterson

I'm not sure if this is the right sub-forum for this. If you can tell me of a better place, I'd appreciate it. 

My girlfriend and I want to employ the BRRRR method to invest. Unfortunately, we don't have much cash nor do we have any experience. My first question is how much experience are private and hard money lenders looking for?

Beyond that, my friend is always looking for opportunities to invest. We each proposed a way to operate as partners. 

My proposal: He provides all the money for the purchase and rehab. My girlfriend and I do all the work. He gets his initial investment back plus 34% of the cash out refinance. When I first stated this proposal, he thought I meant he would additionally get 34% ownership of the property and therefore 34% of the cash flow. He said he wanted to be involved in the decision making at which point I said more for him was fair in my opinion.

His proposal: Each party initially owns whatever percentage of the money they initially invested. My girlfriend and I also get more percentage based on finding and working deals. We also get 5% extra for being more active in managing the day to day needs of the investment. He did not yet have input for what to do at the the time of the refinance. He was willing to lend a portion of the house to us (its value) on which we would pay interest until that loan was paid back to him, presumably after the cash out refinance. 

Those are the two deals. Are either of these fair? What would you do if a friend with money could become your partner in REI? Thank you in advance.

Hey @Lauren Thomas. @Delia Washington and I are looking out of state, specifically Toledo OH. I'd love to talk about OOS with you. Maybe next time. 

We will be at Out of Bounds a little before 6. I have to go to my car for an unrelated Zoom meeting at 7 but Delia will be there for the full meetup. See y'all tonight. 

Chad Carson, in his Real Estate and Financial Independence podcast episode 41, said that he did a lot of his investing in properties with a price to rent ratio between 5 and 8. I cannot recall if he indicated those were for flips or buy and holds, but considering he holds many rentals, I'm going to assume some of those were for rental properties.

I therefore thought low price to rent ratio is better. But then, reading an article on price to rent ratios, it said that the higher the ratio, the less sense it makes for a prospective home buyer to buy a home. If the ratio is too high, it makes more sense for that person to rent. Considering I want to be a landlord, shouldn't I want a high price to rent ratio? 

Using an extreme example, if I own a property in San Francisco CA, it can rent out at a very high price. If I own where all the for sale property is relatively cheap, my potential customers might just go ahead and buy instead of renting from me. 

So, my question is what is better for a buy and hold investor - a high or low price to rent ratio? 

Thank you @Dave Poeppelmeier, @Christopher B., and @Michael Temple! That was very helpful information. 

Thanks @Stone Jin, that's a great idea to just check rental listings. I should have thought of that. 

Thanks Rob! I really appreciate it. 

@Rob Badhorn

I have a simple question; I tried googling for it but was unsuccessful. Who typically pays for the water, sewer, and garbage in Toledo? Is it the landlord or the tenant? If it's not dictated by law, who typically pays for it? In other words, what will renters expect? If the landlord pays for it, could you provide a range for the expense if possible? Thanks for any help! 

I'll be there. Looking forward to it.