All Forum Posts by: Kevin Hoodwin

@Justin Tinsey I will refrain from commenting about out of country investing.  That is not my area.  I would have your partner set up an appointment with their US-based attorney and banker to ask how that would work.

If all checks out, being out of country doesn't change the structure of the profit split.  Split profit depending on how much money and work each party contributes.  It's very easy to do many RE activities online nowadays, so investing from a far is not difficult anymore.  Also, if you're buying and holding, 5 years is cutting it close to making it worth your money.  Selling it after one year could prove to lose you money.  Depending on how well you buy, you may lose money on such short time periods due to closing cost and short term appreciation variability.

@David Pere Hit the VA information on the head; he put it into perspective so you can make a better decision. I will be an O-1 starting in May, so I'm not hands-on experienced with VA just yet.

As for you profit split, typically it'll be a 50/50 split.  Now, if they put a substantial amount more money into it than you to where the return doesn't make sense for them, then I'd consider increasing their percentage.  If you are doing most or all of the work, I'd consider increasing your cut.  Usually, a 50/50 split suffices those needs and is perceived as "fair" by both parties.

When estimating numbers, add 10+% to expenses and remove 10+% to costs.  Stay moderately conservative.

 Thank you!

I forgot to mention I was working with an investor that brought $30K into the deal.

I intentionally sold it at a lower price so I could get it off the books quicker.  It was more like a learning experience in my mind.  My partner was okay with that as well.

You definitely have options.  Some that come to mind:

• Create a new LLC with two members, your current LLC and your father in-law. Split profits as you see fit.
• Joint venture with your father in-law.  Write into the agreement the terms of the transaction and distribution of profits.
• Accept a loan from your father in-law and secure it with a 2nd lien on the property.  This is ideal because it would give y'all control of the property while fulfilling your father in-law's wishes.  It would also be a selling point to you father in-law because his investment is backed by the property, reducing risk to him.  Write negotiated terms into the note.  (I suggest this one)

Remember if you're buying the property in your personal name with the VA loan, it will not be under your LLC. You will have to deed it from you to your LLC. This could prove problematic if the bank has a due-on-sale clause.

Hope this helped!

Howdy BP Community,

Recently, I finished up my first deal.  It was an owner financed wrap around sale.  It's in the Dallas area.  I now have an originated note for the next few decades!

Details:

• Bought for $187K with a 20% down mortgage at 3.78%
• Put $5K rehab into it (light TLC)
• Sold with owner financing for $200K, received 10% down, 9% interest rate
• With all said and done, I have created a 25% ROI

Let me know what y'all think!

Best regards,

Kevin

There's an event tomorrow at 9AM. I'm going in person, you can also Zoom in. Here's the link to the REIA!

https://dfwreiclub.com/

Some quick thoughts I had while reading your post:

• HELOC your homes to cover the 20%
• Put your homes up as collateral (if you're confident you won't lose money, be careful)
• Open an account at your local small bank or credit union then they can offer you favorable terms
• You can ask these lenders "what it would take" to lower the down payment.  I would use that language to reduce the odds of the thought in their mind of you not being able to do that
• Bring in a third financing partner
• Purchase the house with owner financing and negotiate favorable terms

Tip: Join your local REIA and advertise your services. Real estate agents often disregard investors. If you can really tailor your services to the investor community, you'll be one of few who RE investors will come to.

Tip: RE is what you make it (within the law of course). RE agent classes will teach you what you need to know to conduct basic RE operations. When you join your local REIA, you'll learn all the ways in which you can be creative in RE.

DISCLAIMER NOT A LAWYER

Technically, if there is no contract there is no agreement.  If there is no contract to purchase the property, you and anyone who represents you cannot conduct any rehabs without written consent from the current owner.  If there is no contract between you and the contractor, then there should be no representation.  You can definitely be penalized under agency law (meaning whether or not he's an agent representing you or not).  It would depend on your state's laws.  That would be a good question for your attorney.