All Forum Posts by: Mohamed Berete

Thank you @Kris Wong @John Corey, @Tim DiVito and @Eric Martel . Going to use these feedbacks as talking points to flush out the structure with my cousins.@Eric Martel

Quick note: I have no prior experience in this space. I am a software engineer, but have consumed ton of material and contents over past 6 months. 

Thanks for the great and quick feedbacks. I will try to be as detailed here:

1) There will be 4 us total, including myself. Each will put in 20k for 25% equity. So total raised is 80k. For this, I think we will max out between 3 - 5 units with a combination of SFR, duplex, or triplex. Most likely only myself and 1 other person will be able to go beyond this 20k number in the long run.

2) I will be the one taking out conventional loans for these properties, especially in the beginning, because of my financial positions. I make more than 120k a year. I hope to transition to other financing options once theres credibility. For my "troubles," I will get 1% fee for the amount financed as a one time line item expense. 

2) I have a personal goal of 30+ units (or way more), and prepared to invest more dollars probably in a new LLC after this initial round. After couple of units, I think it will be easier to get other financing.

3) I "manager" of the overall business. Starting with creating the LLC and operating agreement. Working with the realtor to find deals and put them together. Finding the right tools and putting the business ops and processes in place. For these duties, I will take 1% fee per year of the total dollars we raise.

4) We will share the property management responsibilities. 

5) There will be no distribution before 2 years. After that, it will be quarterly per equity. 

My logic here was that it will be easier to get the first few properties with less out of pocket costs and leverage that into more credibility to get financing deals with banks. While that is good, it doesn't feel right. However, not sure what additional equity I should get or whether I should even do it. 

Hello,

I am looking to acquire rental properties in the Cincinnati, OH market. I make good money, financials in good order, and own a primary residence already. As a way to scale quickly and reach a target goal (25+ units), I have discussed partnering with 3 cousins and each person puts in $20k with equal equity, and I will be the manager and make major decisions for 1% annual fee. 

1) Am I being too generous for only 1% fee and equal equity?

2) if others will be limited to only 20k total contribution, and not more, does it even makes sense to partner with them since distribution amounts will be "small" after division? I have lot more disposal income to contribute, but also wanna scale quickly. 

3) does limiting partnership, but higher individual contributions, makes more sense even though we will have to move more slowly in the beginning?

Thank you.