All Forum Posts by: Jordan Naeem

Quote from @Alexander Yates:

@Jordan Naeem,

Nathan and Jay make solid points above... is there potential for you to invest $50k and take a 10% equity position while reserving the additional $50k for another deal of your own or another partnership? Obviously that means your two partners in the deal you mentioned may have to increase their cash by $25k each.

I would also be weary of the expectations of your partners in regards to property management. Make sure you have all of your responsibilities and expectations (as well as your compensation!) clearly outlined in your operating agreement. I have been in a somewhat similar RE venture in Reno, NV where my partner brought the money and I did all of the hands-on work. If you aren't properly compensated for the boots-on-the-ground duties, it can start to feel unfair very quickly. Perhaps in addition to your hourly rate, you could negotiate an additional 5% equity stake for your effort? Or maybe you set yourself up more like a professional property manager, where you earn extra money for placing a tenant and/or a percentage of the rent each month rather than just an hourly rate when you have to jump into action. 

If you go the route of reduced equity upfront, that free $50k could go a long way in your market. I invest in the Cleveland/NE OH market as well, so I see a lot of deals there. I also understand the difficulties associated with getting your spouse on board. Once your new partnership is up and running, you should clearly outline the investment for her (in simple terms) and talk to her in a way that expresses 1) you understand what you're doing and how to be successful at it and 2) you can replicate this success and it makes sense to acquire more properties. It's important to address her fears and hesitations, which often include things like getting phone calls in the middle of the night from tenants, having all of your spare time taken up, what happens if a house burns down, etc. etc. etc. Then follow those concerns with solutions, such as having a system in place for tenants to make maintenance requests (including in emergencies), why all of your spare time won't be consumed by these investments, being properly insured against hazards, etc.

Your wife doesn't have to be passionate about real estate like you are but if you address the concerns upfront, it's much easier to get the ball rolling in the right direction. Then your $50k could get you a duplex in a decent area with a good lender and a little in reserves for repairs and upfront costs.

Hope this helps! Feel free to connect and let us know how this plays out!

Alex

 Lots of solid advice Alex. I will definitely make sure all responsibilities and expectations are included in the operating agreement. I have been networking with some real estate attorneys so I'll be making sure to utilize them to make sure all my bases are covered! I may try to broach the subject of a 5% equity stake, but they seemed averse to it when we were initially discussing terms at a high level. ITs worth a shot though. I do like the idea of setting myself up as a professional property manager. That would definitely make it more beneficial and I would probably be more positive about the deal. Great idea.

Yeah truly the main reason why I haven't deployed any capital yet in my market, despite there being opportunities present is simply because my wife is so iffy about it. I definitely need her support to make such a big investment and I've been slowly trying to get her to come around, but its been difficult to figure out what would make her most receptive to the idea of real estate investing. Your breakdown of outlining the investment for her after the property and partnership are stabilized is what I was really hoping to achieve with this whole partnership. Having the two additional partners that she knows and trusts has given her enough nerve to let me go ahead with it, and so if I can successfully manage it and breakdown the points you listed above, I think that would be the key to getting her on board. I think you are right on the money.

Thank you so much for your thorough and extremely helpful response! I really appreciate it.

Quote from @Jay Hinrichs:

I personally like the all cash plays. sleep well concept. but mathematically leverage of course creates higher returns if EVERYTHING runs right. Thats the big IF..

Why dont you simply take a smaller % do this deal wtih them but keep your won powder and do your own deal side by side  .. ???

Thanks for the response Jay. I guess I could look at it as this would be a good opportunity to test my chops at something more challenging than a single family rental with minimal risk. My main reason for not wanting to take a smaller % is I want it to be worth my time and energy put into the property. Even though they will be paying me for any time I put into the property management, its not meant to be an additional source of income, and the main payoff would be through any appreciation and rent increases in the property. It is worth something to consider though, so thank you! I will think on that.

@Nathan Gesner I think maybe the experience piece is what I'm hoping to achieve with this property. I think if we can get good cash flow coming into the property and force some appreciation, as well with seeing me manage a multifamily property as opposed to our single rental we have now, that that would be enough of a "proof of concept" to get her on board. That's why I'm thinking it might be worth it even though its a lower return, if it gets her on board I'm hoping that will pay off in the long run.

I will attempt to see if I can get her to read at least the Unofficial guide as well as your example and see if that spurs anything in her. I appreciate the solid advice!

Hello everyone,

I'm a newer investor and looking for a little advice for a potential partnership and multifamily investment. I'll try to give as much detail as possible so sorry if this is a little long-winded.

I have two potential partners who are looking to do a deal together to buy a 2-4 unit in Cleveland (B neighborhood or higher) where I am located. They want to buy the property in outright in cash and as of right now have no intentions to cash out refinance after stabilizing. They would each be putting in 200k each and I would be putting in 100k and would be responsible for all the property management, being paid by the other two on an hourly rate when responding to issues. The equity and profit would all be split based on money put into the deal, so I would have 20% equity and would be entitled to 20% off the net profit.

Here is my issue: both of them are pretty set on holding the property free and clear (10+ years) because their primary goal is solid cash flow and secondary income to their businesses which can be seasonal. My issue is that it would take me another couple year to regenerate the capital that will be tied up in any potential property with a not great cash on cash return, and I know a lot of the power of real estate comes from leverage and loan paydown. So my question is, are there any creative ways to make this work for everyone so they can generate their cash flow free and clear while I am able to have a better cash on cash return and have additional capital to deploy later? Or am I better off just having the lower return and not trying to get cute with it?

One piece of important context: Both my wife and I are early 30s and have good paying W2 careers. My wife is more of the traditional W2 worker who just invests in her 401k and thinks real estate is risky. We rent out our previous home and bring in $600 a month on it after mortgage, taxes, and insurance, but she doesn't see it as an investment property and so it has been hard to continue investing without her support. She knows and trusts the two potential partners so she has finally gotten on board with doing this deal -- so I'm wondering if having a low cash on cash and depleting my investment reserves is worth it to get her on board the real estate journey and have her contribute capital to be able to scale faster with her help later on.

Any advice is appreciated. Thank you!

Quote from @Scott Lundgren:

@Jordan Naeem 

Welcome to BP, I think you will find there are many great connections you can create here.   Learning from those that have already been down the road you are headed is always a great decision.  I know I've avoided many pitfalls by networking with the right people. Cleveland is a great place to start, many great opportunities there. 

 Hey Scott! Thank you. I can already tell that this is a special community and I am happy to be joining it. I 100% agree -- learning from the experience of others is one of the most valuable things one can do. I'm excited to get started and to start building relationships with everyone here. Thanks again for the welcome!

Quote from @Erin Dorsey Robinson:

Hi Jordan!

Welcome to BP. First- no shame in lurking lol! This is an excellent place to learn from other people's conversations even if you decide not to jump into the fray. But glad you have come on out to say hello :). 

Have you lived in Cleveland for long or did you move in 2019 from someplace else? I'm always interested to chat with local investors as it seems that a lot of people discover the opportunity that Cleveland represents only after living someplace else. Feel free to reach out directly if there is every anything I can do to help as you are getting started with investing. I'm glad to introduce you to contractors, property managers and others who can help you along the way.

All the best to you and your wife!

E

 Hi Erin! Yeah I definitely don't think there is anything wrong with lurking. I just know for myself I will hold myself more accountable and get more out of learning from everyone if I am an active participant! I love learning and this seems like one of the best way to learn from those of you that have already been in my shoes and walked the walk!

I lived in Cleveland my whole life until college when I went to OSU and lived in Columbus, then I joined the Air Force and spent 4 years in Shreveport, Louisiana, and now I am back in my hometown where I intend to stay! Thanks so much for all the kind words!

Quote from @Shane Kelly:

Quote from @Jordan Naeem:

Hello all! I've just begun my Real Estate Investing Journey and instead of lurking in the forums I've decided to take a more active approach in participating in the BiggerPockets network so that I can learn from all of your valuable experience and form relationships with other Real Estate Investors and like-minded individuals!

I am an Air Force veteran living in Ohio with my Wife in our single family home that we own in Cleveland. I work fulltime as a software engineer in a job that I absolutely LOVE -- but I want to make sure that I am putting my income stream to good use in growing my assets and securing a financially free future for myself and family (although I probably still want to work because I like what I do).

My goal is to be able to be financially free and be able for myself and my wife to retire in 20 years. My plan to try and reach that goal is to buy and hold Multifamily Homes that can cashflow while continuing to work my 9-5 for income. Currently, we are looking to upsize to a larger home using the VA loan as we are starting our family, and rent out the home we are in right now (which has appreciated by somewhere between 60k - 80k since we purchased it in 2019).

I'm grateful to be a part of this community and I'm looking forward to learning and growing with all of you!

Thank you for your service and welcome to BP. Being active on here is one of the best steps you can take as a newbie, just look at the traction this post has generated already. Your plan seems rock solid through and through. You have a very realistic goal of retiring in 20 years through real estate buy and hold, and you don't plan on trying to get there by doing anything crazy but instead by keeping your 9 to 5 and getting access to conventional and portfolio loans. Also, using the VA loan to it's maximum benefits is a big advantage to being a veteran. I'm still learning all of the possibilities of it, but I know it can be a hell of a tool to fix up a home to build equity and then move to a new home to do it again. I would love to get the chance to help you in your journey, so if you think I can be of any assistance, shoot me a PM. Best of luck!

 Hi Shane! I have actually been blown away by how many people have reached out and who are willing to help and share their experiences. No doubt that the power of networking here is incredibly powerful. I appreciate your thoughts on my plan. I've really tried to be deliberate and thoughtful about my goals and setting realistic, but ambitious goals for my future. I'd be happy to connect! Thanks for the post!

Quote from @Brandon Rush:

Jordan,

Welcome to the squad! You are in good hands here. Get ready for an incredible journey!

 Hi Brandon! I'm so excited for whats ahead. I can see the path before me, and I am so ready to begin! Thank you for the warm welcome!

Quote from @Nicholas Salman:

Jordan congrats on starting your journey, this is an amazing place to be! Thank you for serving. Va loans are an amazing tool to use when it comes to investing. My branch manager and I just spoke this morning about how he used his to get 3 duplexes. It’s a benefit that is well earned. Let’s definitely talk more about your goals! Take care!

Hi Nicholas! It was an honor to serve. I definitely intend to make use of my VA loans. I know what a powerful tool they can be for investment properties -- especially MFHs -- but due to my family situation I think the plan is to use that to move into my next SFH while I rent out my current. Thanks for reaching out!

Quote from @Nathan Murith:

Welcome to BiggerPockets and congratulations on doing the work, @Jordan Naeem

Always looking to connect and exchange with like-minded people! Happy to share all the stories, mistakes, successes, resources, tools, tips, tricks, whatever you might find helpful.

Please don’t hesitate to reach out!

 Hey Nathan! That would be fantastic! I really believe learning from others mistakes and successes are a huge part of succeeding in any endeavor. I'm trying to keep my mind open and really absorb the wealth of knowledge that is present in this network.