All Forum Posts by: Matt Powell

Directly from my RECampus real estate salesperson course:

Thanks Michael. All great advice. Much appreciated.

@Michael MoikehaWould the bank be looking for a written JV agreement? Also, my parents are out of state. Does that matter?

@Michael MoikehaYes, thanks, that's more what I'm looking for.

So I really have two guaranteed sources of capital: a HELOC on my primary residence (about $30k) and a private investment from family (up to $25k). 3/2 houses in my area in need of rehab could go as high as $250k, meaning that total of $55k likely won't be enough to cover 20% down + rehab + holding costs. Any remaining balance I'd have to make up with hard money.

I'd like to fully leverage my HELOC and my dad's private investment, but I'm aware that down payments can't be gifted for an investment property with a conventional mortgage. So I guess I'd have to enter into an explicit JV agreement with my dad and make that agreement known to the lender? I literally know nothing about doing that. Would we have to do an LLC? I hope not, because lenders aren't going to do a conventional to a brand new LLC. How would I go about doing that JV (like... what terms are common) and how do I get the bank to lend with that type of agreement?

Appreciate your advice.

Hi all,

I'm about halfway through my licensing course, and it's possible this question will get answered further into my course material, but I thought I'd go ahead and ask.

I plan on using my license exclusively for my own investment deals, so I don't plan on handing out many "Hey, I'm an agent, call me for representation" cards. Instead, I plan on getting some "Hey, I'm an investor, who also has a license" cards. Are there any rules about where and how I can indicate that I'm a licensed agent, including my license number? Can I only put those on a card with, say, my brokerage's logo (or name). Or can I willy nilly throw out there that I have a license on any business card I choose?

Thanks!

@Jeff Rabinowitz Thanks. I'll certainly involve a lawyer before making any final decisions. I'm just trying to scrape the surface at this point.

What is more common with private investors, equity partnerships or just straight lending with points and interest? Let's assume we're not talking about family members.

Are there other ways to document equity stake without it being in the operating agreement of a legal entity like LLC? I'd like to be able to arrange different equity partnerships with him for different deals, depending on what makes sense, without setting up a new LLC for every deal that's not exactly the same. Is there a standard document you might use in this scenario?

Also, unless I'm mistaken, I won't be able to get a mortgage under a newly formed LLC. I suppose I could get the mortgage in my name and then transfer into the LLC and hope the due on sale clause isn't triggered...

@Jeff Rabinowitz Thanks. Can I dig more into the equity partner avenue? What would it mean, practically speaking, for someone to have an equity stake in a buy-and-hold deal? If the partner has, say, a 25% equity stake, does that mean they'd get 25% of the cash flow from the property? And would the private investor actually be on title with me? Or would we track that in a separate contract? What legal means could we use to document how much equity each partner has?

Hi all,

Short background: I'm looking for my first deal - a buy/hold - and plan to get a conventional mortgage (Fannie/Freddie) because my only conventional currently is my primary residence.

I can't seem to get my head around typical deal structures with outside investors. For a buy-and-hold deal, would we be talking equity investment or just good interest rate on their money? What would a typical deal structure look like with a private investor that's fair for both parties?

More details:

• I have very good credit and very good income.
• Private investor is my dad. He has some money that he'd like to put to good use. About $25k maximum. He lives out of state (NY). I live in MD.
• I'm open to getting a HELOC on my primary to contribute toward raising capital needed. We have about $40k equity right now.
• I'm open to using hard money for anything left over not covered by private and HELOC.

So I'm interested in the best way to structure a deal with these players, but most interested in how I can make it a fair and attractive deal with my private investor. Because it's my dad, we have some flexibility in how we structure that segment of the deal. Any advice would be appreciated. Thanks!

@Ellis San Jose Were you ever able to get an answer to this? That's a really interesting situation.

So, to be clear for the private lenders, you're looking for 218 + 80 = $298,000. Sounds like you can do all the legwork.

Too rich for my blood (by a wide margin), but I'd be interested to hear how you end structuring the deal. I'll be following the thread. Good luck.