All Forum Posts by: Josh Rich

You're putting into the deal 50k, on which you'll get 20% interest for the term of the project - or just 6 months? Right not I'm restructuring the deal due to usury laws. And yes, it will be for the term of the project which is projected for 3-4 months, should not go longer than 6 months.

In addition to the interest, you'll get 25% of the profit from the deal. If there's a loss, will it also be a 75/25% split? This is an assumption on my part and will be captured in the contract, but yes...that is the plan.

Will all costs - holding, acquisition, taxes, materials, labor, etc be covered by the initial $100,000 of the partnership investment? If not, how will additional funds be requsistioned? Yes, that should cover everything, we are targeting $95k and giving a bit more for cushion.

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@Jay Hinrichs: good to know, thanks for sharing the insight. Right now I'm looking into restructuring the deal to stay within the bounds of usury law.

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@Will Barnard: my answers are bolded...

You have two options, be on title to secure your interests or be a lender with a recorded deed of trust. Any other option would not be secured and thus, not a true option.

Plans for now are to be a lender with a recorded deed of trust.

Question, you state you are 25% profit share but then state you get 20% interest! is it both or one or the other? Big difference in how I answer you.

Both, because I'm going in 50/50 on the cost side.

You are in CA and our usury law maxes at 10% unless you are licensed. Not sure what state the property is in, but as a lender (unlicensed) you need to be sure of the usury law there.

I will await your answer before continuing with a suggestion.

Interesting! (pun intended, haha). Never heard of this law capping at 10%. Thank you for bringing it to my attention. The property is in TN, not CA, which has their own limits.

When I looked more into this law, I started wondering if perhaps an ammendment to the contract could be provided and signed by the borrower indemnifying the lender of any usury law violation? Thoughts?

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@Jay Hinrichs:

Thanks for the tip, I think I will be putting it into writing with a contract. We are discussing what route to pursue with a real estate lawyer.

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A BP friend and I have been talking about forming a partnership by doing a fix and flip deal together and we need some guidance. Here's the rundown:

We are splitting costs 50/50, profit share is 75/25 (he is experienced and will be involved in the flip, I am out of state). We are both putting in $50k, mine would be in a form of a loan earning 20% interest-only for 6 months. (sort of like a Hard Money Loan with no fees). The deal will be in his name, or the name of his LLC. We are buying at auction, site unseen.

What is right, or wrong, with this scenario? What type of a contracting agreement should be in place? Any lawyers out there who wouldn't mind sharing some friendly insights? Any hard money lenders out there who might have some thoughts on the deal? Thanks in advance for any and all replies!!

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@Ann Watkins Your strategy would work great, if I was near Houston. Being thousands of miles away, that is difficult.

Would you mind sharing any contacts of those great contractors you might have found? Specifically, I am looking in N. Houston (Spring, Tomball, Woodlands). Thanks in advance!

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Welcome! Listen to the latest podcast (#60) Serge did essentially what you're talking about and you will get a more realistic idea of time and effort involved. In fact, review all the podcasts, if you haven't already, they're both informative and entertaining.

With your goal timeline being 5 years, I would advise going after what you want (strategy-wise) and being persistent until you succeed. Avoid getting into "analysis paralysis" mode, or you will never make that goal. That said, I admire your ambition and there's no harm in big dreams, they often turn into amazing realities!

Be sure to set up your keyword alerts on subjects/locations of interest. Don't be afraid to "follow" the posts of people you admire and want to learn from.

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@John I find it interesting that you are in a cash flow heaven state (IL) and looking to invest in cash dry CA!

Almost every investor I know here in the "Golden "state is positioned out of state, many in IL, because deals are so hard to find here and so much less profitable. Why not take a look in your own backyard?

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Quick thought, in my experience of looking through MFR deals anything renting for around $500/month will not be "turnkey" as there is much to do with that tenant demographic (evicitions, collections, etc). Find a great prop mgr who specializes in the C class properties and has experience with that tenant demographic.

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All Forum Posts by: Josh Rich

Josh Rich has started 14 posts and replied 82 times.

Post: Partnering on my first deal

Post: Partnering on my first deal

Post: Partnering on my first deal

Post: Partnering on my first deal

Post: Partnering on my first deal

Post: Partnering on my first deal

Post: Houston Contractors

Post: Forming a strategy versus receiving opportunitties

Post: Multi-Family Purchase checklist

Post: small apartment complex