All Forum Posts by: Mitchlyn D.

Hi @Anna Sam,

Have you looked into Ocala, FL on your goal to find some cash flowing Multifamily/ Apartments? I have worked and analyzed deals, on and off market in virtually every part of Florida and have not come across a sub market with existing cash flow/equity upside as Ocala. There are certainly areas you want to be and areas you don't however the target markets we are operating in have a need for entry level "affordable housing" and small multi family fills this demand. I've been investing here for the past few years and have built a little over a dozen new construction single family homes and acquired a Self Storage building so am very familiar with the dynamics/management/renter quality ect and have been very pleased. Currently building a handful of 2,000SqFt Duplex(s) for under 250k all in project cost with a market value of $425k when built (comps). Why is this opportunity so good? We have a builder relationship that we have previously worked with has presented opportunity to build block properties at a very reasonable price per SqFt. The materials and labor side of the equation has cooled off tremendously since last year which is why the price to build makes sense. What is the catch....the biggest hurdle is having to pay cash in a draw schedule up front compared to using tradition financing which we have previously capitalized on. Essentially the builder is using our money to build vs there own which is why we are able to build for 60% of market value. Typically most people that do these deals are middle man flippers but in this case for us, we are keeping as long term rentals because the cash flow is great however this may be a great market to house hack or Brrrr with the amount of forced equity day 1 or potential finance down the road when rates cool off. You will find a handful of New Construction and even decent resale Multi Family deals on the MLS and will pay between $150-$180 a sqft for the older resales and $185-$225 a sqft for new construction depending on size, specific location, finishes ect. With this builder, we are building all in (with land) at $125aSqFt. These 2,000 SqFt 4/4 models rent out for $1500+ a side / over $3000+ of gross monthly income per duplex. For reference, annual Taxes and Insurance are $3,400 and $1,100 respectively for each Duplex.

Hope this helps and best of luck with your goal! I am curious to see other markets out there that may have this same type of potential as I have only invested and have experience for the most part in Florida. 

The first mistake you made is assuming that the partnership would be divided evenly (50/50) just because there are two of you.  You really answered your own question, without realizing it.  Here's what I do, and it has never failed me since I started doing it this way:

1 - List all of the responsibilities/roles that need to be filled (don't assign them to anyone...yet)...don't miss ANY, even the minor ones.
2 - Without any consideration as to who will be doing each R/R, assign a number from 1 to 10 to each where the numbers are based on the relative importance of each one compared to the others.  This means you can have more than one with the same number.  Actually, they all could have the same number, but not likely.  This is NOT a percentage, just a comparison number.
3 - Now, assign each R/R to the person performing them.
4 - Add up the numbers for all of the R/R to one number...it will probably be well over 100, but it could be less...at this point the total doesn't matter.
...here's where the true percentage return is decided based on work/importance of each R/R done.
5 - Divide 100 by the number you got in Step #4.  This is your R/R value factor.
6 - Now add up all the R/R numbers separately for each partner, and multiply that total by the number you got in Step $5.

Congratulations!!! You just assigned the correct percentage each partner gets based on the value/work each partner contributes to the partnership.

 Hey @Mitchlyn D. , Great point. to answer your question, Ideally find a property I could add some value to right of the bat. However, I only have 100k heloc to work with, so the purchase price would have to be right. Also like many of us, I plan on buying in an area that is experiencing growth.

Now if the property doesn't gain value and I am unable to pay off the Heloc, that's where I am stuck. That's one of the reasons why I'm here asking questions. Any advice on how people pay off their Helocs when using them as a down payment?

Thank you for your time