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All Forum Posts by: Account Closed

Account Closed has started 11 posts and replied 613 times.

Post: Syndication and escrow

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Steve S.:
...Is it common for money for a syndication to flow as I describe above (ie from the investor directly into the LLC)?  If this is common, it seems to leave investors more susceptible to fraud, as the LLC managers could conceivably pull the funds out of the LLC and abscond with the money without ever having purchased the property...

There are many ways to skin a cat... utilizing escrow is common and safer although it really boils down to whatever the parties agree to. You obviously want to review carefully the specifics of the placement memorandum, prospectus or any other operating document governing the investment scheme or contract.

Post: Help on building an investment fund

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Ken Parmelee:

Have an opportunity to buy a parcel of properties and am looking to put together an investment fund to make the purchase. Need help on structuring the fund itself and the legal docs to get it going.

 What is the value of the fund in question?

Post: Syndication to nonaccredited or sophisticated investors

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Steven Kleppin:

Hello. I want to start to syndicate and I have several family and friends who are interested in investing in me. I also hear many times on the podcasts that people go to friends and family to raise money on their early investments. But it seems like those friends and family would have to be accredited or "sophisticated" investors to not violate SEC laws. Is there something that I'm missing? I know I could do an LLC with them being limited partners, but was specifically looking at syndication because I think I'd need a larger number of investors than what's generally accepted as LPs in an LLC.

Thanks for any help!

Usually if the only investors in your project is family members, that may not necessarily be a good thing. Should things go south, relationship with family can be irreparable especially if they loose money. Whenever you start 'raising' money from investors, family or not, you always risk raising compliance concerns with securities law.

Post: Can bitcoin be utilized in real estate?

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Michaela G.:

I'm just wondering if there's a way that bitcoin could ever be utilized in real estate?

Maybe accepting rent payments in bitcoin?

Selling a property with bitcoin?...

You just have to understand the risk involved. Bitcoin has similar characteristics to a stock in that the value can increase or decrease almost daily. If you were selling a property, and got paid in stock, the value of the proceeds could  increase or decrease in either direction. With bitcoin, the 'currency risk' can affect your net earnings based on when you wanted to access the funds.

Post: Purchasing from wholesaler

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Sean Kelly:

...gross rents for 3 occupied properties is $2150 (2 SFU and 1 duplex)

prob $500/mo potential rent on vacant home; needs work though to get it rented. lets shelve that property for this discussion though

net cashflow for 3 properties after tax, debt service, prop mgmt, tax, ins, 10% vacancy, 10% repairs, etc. is conservatively ~$650/mo .. 17.2% IRR assuming a 10% cap..

Are you only utilizing the cash flows (both current and FCF) from 3 of the 4 properties to evaluate the soundness of the $110,000 investment (all four properties)?

Also, you mention a cap rate of 10% but if you are assuming net cash flow of $650 per month (from all 4 properties) that = $7800 per year and translates to a 7.09% cap rate on the $110,000 investment. 

If the vacant/unrehabbed property can rent for the mentioned $500 per month, net cash flow on that property = $151.16 or 30.23% of gross income. That then = net cash flow on all four properties of $9613.95 per year and a cap rate of 8.74%.

How are you getting to assume a 10% cap rate? Also, what the the market cap rate in that specific area for similar properties?

Post: Suggestions on how to invest 50k

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Rami H.:

Hi guys,

I am new to the REI business, got my own company and interested to start with wholesaling, flipping houses in the D.C. Metro area. Wanted some suggestions and thoughts on what to do with 50k if I was to invest it in the industry with the lowest risk possible. I know the amount isn't much but still better than nothing.

Thanks..

You might have to define 'lowest risk'. What type of return are you aiming to earn? It very well may be proportional to the risk assumed. There are just about as many ways to invest $50,000 or any amount of money as the number of casinos in Vegas. About wholesaling, if you are not a licensed real estate professional, you want to make sure it is actually 'legal' for unlicensed persons in the state you are contemplating. 

Post: Student Loan Debt - Enough to Buy a House!

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Daniel Ortiz:

@Account Closed - I was thinking the same thing with respect to @Marcus Johnson post.

It's not really about the amount of their or your student loan or if 5 years is too long or short to pay it off. Each person's life circumstance vary; perhaps they had other financial obligations, kids, mortgage etc. or just decided to stretch it as long as feasibly possible. It is however a common theme in many metropolitan areas that wage levels could use some boosting to keep pace with cost of living. Regarding which strategy works best for you, it's also what you feel comfortable with. Some may be of the mindset that if you find yourself in a 12 round heavyweight bout, you don't dance around for 12 rounds and risk getting hurt if you can take out the opponent in the first. 

Post: Private Lender help & information

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Brittany Brown:
I'm looking to buy a foreclosed home that is currently not getting any offers & has been sitting on the market for 129 days. The only problem is, I need to figure out funds & private lending. The original listing price was 150k which was lowered to 145k then 139k, 134k and they just did a price drop to 114k.

The house needs a lot of tlc but once remodeled will be well worth it. Where is a good place to find local private lenders? Or creative ways to go about this deal? I've never bought a foreclosed home, only owner financing. I have my own home and an apartment complex I currently own through owner financing... How would I get started with this deal?

Does the deal make sense? Its not just the foreclosure acquisition cost that matters. If repair cost is excessively high such that there isn't sufficient margin between ARV and total ownership cost (repair, acquisition etc.), that can be risky. Persons being foreclosed on can be psychologically unstable and may retool the interiors in all sorts of ways increasing significantly the cost to bring the property into habitable condition.

Post: Is there an alternative to using HML's?

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Patrick Philip:

Aside from cash, HELOC, or an investor, is there a way to fund the bulk of the purchase and rehab with a different type of loan?

Do smaller banks offer "rehab loans" that are not for your primary residence? 203k or something like that?

Of course there is always a ton of funding solutions and strategies. The question is, which is best for you based on your particular circumstance.

Post: $100k+ in student loans

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Sergio Najera:
...I'm really open to any suggestions or ideas as to how manage my student loans in order to begin my investing career...

 Do not subscribe to the idea that you should put your life on hold until you pay off student loan debt. If you can, run, not just walk away from low wage paying jobs - its a sickness that only gets you in a deeper hole.