All Forum Posts by: Will Barksdale

BP, I have an interesting question regarding ownership percentage vs. profit allocation percentage within an LLC. I want to have an operating agreement where party A owns 60% of the LLC and party B owns 40%. Additionally, we want to split all profits and losses 50/50 in a buy and hold rental business. Here’s the question: -can the paper losses of depreciation, interest deduction, and other write offs be split 50/50, or would they be required to follow the ownership percentages instead? Looking forward to your inputs. I’ve done a bunch of searches for this data and have been unsuccessful-I’m probably not searching for the correct words.

@Cain McNeil  did you end up closing the deal? What financing did you wind up with?

Cain,

  They look great!  Good Luck on the Sale!

Will

Wish I could attend...sounds awesome...unfortunately Uncle Sam has me TDY that week and I won't make it.  Enjoy!

Thanks for the feedback Greg! Area is C+/B- I asked for owner finance to have smaller down payment ability to preserve the capital I have

BP, Looking for the community's opinion on a deal, here's the numbers: Duplex worth about $100-110. Current rents: $1200/month. Deal: $100k, $5k down, 6%, 30 year amort seller finance. Cashflow with current rents is $100/month total after all expenses run through the BP calculator. Property is being leased about $50-$75/door UNDER market. No significant repairs needed. Appreciation rate locally is about 3%. Thoughts? Thank you in advance! -Will

@Jeff Greenberg you raise valid points, particularly considering the amount of cash I have in the bank. I'm thinking I should probably cut my teeth some more in the SFR world before trying to move to MF

@Jon Klaus My suspicion is that I'm not accurately classifying the property, especially when it comes to age. Although well maintained the property is 30 yearsish old, which probably places it more Class B, maybe Class C after doing some more learning on the topic. It's well maintained, and updated, pool, smaller clubhouse, nice landscaping. It is Camelot Apartments in Wichita Falls, if you'd like to take a look, I'd love to see what your thoughts are on it, if nothing else to cage my expectations, and help my learning. Although I just looked it up again and it appears to be sold...

I appreciate the feedback, and no worries about offending me or making me feel dumb...I'm used to it from my primary line of work, and just look to go to bed each night smarter than when I woke up!

@Kate Stallmann I plan to move into multifamily property. I think it will be better for me in the long run, but if a flip of opportunity arises, then it'll be difficult to pass it up!

@Kenneth Hynes I was local during the rehab and did 94% of the work myself with some friends help. I contracted out a few specialty thing such as a new roof, and some plumbing that I wasn't confident I could accomplish according to code. I'm thinking over ways about how I can manage a rehab long distance-seems to me that you must have the right people, otherwise it's not possible and will be more of a pain than its worth.

@Travis L. I didn't always think that way, but I'm glad I've come to my senses. Thanks for what you do!

I'm writing to share the story of my first REI deal finally closing! I started an LLC and bought a cheap, dirty, nasty 3bd/1bath house in north Texas. I spent 6 weeks renovating the house and it cleaned up real nicely: new roof, new flooring, cleaned carpets, complete remodel of bathroom-saved the old tub, freshened up the kitchen, paint, etc... My goal was to renovate and resell to the retail market. I put it up on the market FSBO, and it sat, and sat, and sat, several price drops and 6 months later I couldn't stand it and hired an agent to sell it. 6 months, and 1 bad offer later I pulled it off the market and leased it up. It cash flowed nicely since I owned the property outright, and I kept it leased until this past december when I finally sold it for a 13% cash on cash return. not incredible returns I know, but hey I'm just happy it was a positive return! Some things I learned along the way:

-I'm not good at marketing-I need a pro to do that for me

-I was too proud of the property and had it over priced

-I learned that self managing a property long distance can be done, but it is a royal pain in the rear

-A GOOD property manager is worth every dime they charge. In my case I was unknowingly under charging for rent by $150/month! needless to say once I brought my manager on and she released the property to the higher rent rate I was all smiles.

-A network is important--like so many things it isn't necessarily what you know, but who you know.

-Don't ever quit trying, don't be afraid to change a plan that isn't working. Keep looking for opportunities, and have a back up plan.

It feels great to have finally completed my first deal, even though it took several years longer than I had planned. I want to move now from SFR to multi-family apartments, we'll see how that goes, if nothing else I'm sure I'll learn a lot!

Cheers,

Will

Hello BiggerPockets, long time reader, first time posting-at least in a long time.

I have the opportunity to purchase a couple of multifamily properties that are in the same North Texas Town, but are very different from each other. I have $50k in the bank after selling my first renovation/flip (took 30 months to sell, but made some good rent in the mean time).

Property 1 is class D with 16 units (all efficiencies) located in old downtown, near the hospital and in the medical center of the town. The building is old, but appears to be well maintained, and the downtown area has been slowly, but surely getting revitalized. I haven't gotten any actual data, but preliminary proforma suggests the property is under priced significantly based on the popular rules of thumb abounding on this forum, and has significant upside potential-nowhere to go but up really. Asking price is $190,000. I could easily get the local banks to finance this property with the amount I have to put down. I do not yet know how much renovation, if any, is required.

Property 2 is a class A property with 126 units ranging from 1 bd/1bath to 3bd/3bath units. It is a well known, centrally located, desirable complex. My wife lived there while we were dating, and it is really a great piece of property. Asking on that is $3.3 million dollars! The cash flow numbers work well, but the challenge is raising the capital to finance the property. Additionally it is in such good shape, and has low vacancy, therefore forcing appreciation would be very difficult.

My background: I've owned 2 rentals, 1 SFR, and 1 Duplex. I still own the Duplex. I've self managed for several years, but now I have an awesome property manager who has lots of experience managing everything from SFR to large multifamily, and other commercial real estate. The plan would be to have her, and her associates manage the property. I am no longer local to the north texas region, but I have excellent connections in the area, and know the market quite well based on previous experience living there. My goals are to eventually be financially independent based solely on passive income.

I'm looking for ya'lls thoughts on which deal you would do, and why. Purchasing neither deal is also an option. Thanking you!