All Forum Posts by: Jeff S.

If you are going to use an LLC, then you would have to give up equity in order for your cash partner to be considered a member. As pointed out earlier, a loan to the business is different from ownership. Something greater than an 8% stake in the equity may be able to spin off the required rate of return. You can back into that number based on your projected NOI. But, there are so many risks to the cash partner that just giving them the equivalent of an 8% stake in the property would not be enticing enough to attract the investment. When you listen to other investors that raise large amounts of capital they usually have a track record of success with their particular investment offering. I could see a few options that may sweeten the deal for a potential investor.

1. If one of you held a CPM designation and preferably had some years of experience backing you. That would help in terms of you actually bringing something, other than the deal, to the table.

2. Give up significantly more equity with a provision in the operating agreement where you could potentially buy-back equity from the other partner (possibly at a premium). But then you may be looking at regulatory issues there if you offer more than one type of shareholder class. So make sure you have an experienced RE attorney guiding you. Your cash partner will.

3. Sell the investment for a small equity slice, in lieu of cash, to an investor that has experience with owning and managing a property like the one you are describing. Many articles here are written by experienced RE investors saying the same thing; you have to bring something of value to get an education or investment (cash). The cashflow and equity may be smaller, but the benefits are stacked more evenly for all parties involved.

Welcome to BP Derence Walk! I think that's so cool you can travel and invest at the same time, where in South America are you re-locating? We are in OKC, I'm interested in hearing about your Shawnee investments. Good luck!

Mike H., you had asked for the quickest way to own a 20+ property portfolio free and clear. There are many paths to get there and your first property will be the first step on that path. I'm biased towards mutli's like Brandon is because my goal is similar to yours. As you add more doors to your portfolio the vacancy rate decreases due to the assumption that all your tenants will not turnover at the same time. Having multi's also reduces some of your replacement costs since your water heater, roof, etc will apply to more than one unit. The cashflow generated will be more stable if you have more units to diffuse the vacancy rate. And it is that cashflow that will allow you to pay-down your borrowing costs quickly. I would recommend you check out Gary Keller's, The Millionare Real Estate Investor. He explains the different ways people perceive millionaires in real estate. Buy a million, Own a million, cash flow a million. Which one is better off?

Great job starting young, and good luck!

Brian Hoyt - Congrats, that's great! What is in the works for the next investment? Are you going to use the same strategy as you did for your second rental?

Welcome Joshua Brown, from one Okie to another! The ultimate beginner's guide on BP is a great place to start learning the numbers.

-Jeff

Joel Owens, you are awesome. I've been trying to think of great mother's day gifts and I think the walk-in tub and french style handles are perfect for my Grandmother. Thank you for sharing your ideas!

I'm definitely in line with all this great advice. I would just add that you should follow your gut. If you feel uncomfortable or uneasy then take the proper precautions. ie. Don't go, leave immediately if you are already there, or bring a friend with you like Bill Gulley mentioned. I've been in some odd situations looking at what I thought were vacant properties, and was very happy I had people with me in case something went awry. Know your hood and plan accordingly.

Subsequently, those odd situations also make the funniest stories looking back on them!

Thank you James!

Thanks James! We love and respect our service men and women around here. Tinker AFB is a boon to our community.

Thanks Deborah! Yes, we are looking around NW OKC. Mainly around Lake Hefner, but would be willing to look as far as Yukon, Edmond, and MWC for the right deal.