All Forum Posts by: Patrick G.

Welcome to BP. Like Ned Said, there does seem to be a pretty big Baltimore Crowd. Maybe it just seems that way becuase we are from Baltimore.

Double Check my calculation but investing 65k and getting back 18.4k in 6 months is 57% ROI. Which is effing insanely huge, so heck yeah it's well worth it.

Is all the time you are going to spend on this worth only 4.5k? That seems a little light.

I really like your idea to work with equity partners instead of taking out a loan. I hope to follow suit one day. You have a bit of trouble with the fact that you have 3 money partners. But you (hopefully) have a bit of grace in the fact that they are family. Hopefully you can sit them all down and get them to work together. Mathematically I would approach this in the following steps:

If you took Bryan L.'s advice and split half the profit between yourself and the three money investors it would look like this:

Partner 1) $10.8k profit
Partner 2) $2.5k profit
Partner 3) $1.7k profit

That is still 33% ROI. which is pretty darn good, and you walk away with 15k.

Maybe one partner would accept less profit if he got paid out first? Or more profit if he got paid out last? There are ways to get creative if need be.

I hate to call it wisdom, its just math. I dont actually have experience doing what you are talking about. Look at it and work backwards. Your last scenerio is still unfair to partner one. He invests more money and gets less roi. Plus his money comes first.

If you assume 30k profit and assume partner 4 gets 4.5k that leaves 25.5k to split for the money partners. Should be as such
#1 $18.4k
#2 $4.26k
#3 $2.83k

That is fair to the portion of risk they took and the same roi for each.

The equity share is pretty far off from a straight math stand point. Why would Partner #2 agree to give you $5k more than Partner #3 for the same amount in return?

with your numbers, Partner #1 gives you 65k and gets back $46k. That is a big loss.

With your 90k total investment and assuming you want the manager to get 20% (which means he has basically done $22,500 worth of work, compared to the partners investing money.) The break down should be:

Partner #1) 57.8%
Partner #2) 13.3%
Partner #3) 8.9%
Partner #4) 20.0%

So partner #3 invests his 10k and gets back $10,235 after how many months? Not worth while at all.

Just FYI, they don't actually produce linoleum flooring anymore it's all vinyl now a days. Typically there are 5 types of flooring: Carpet, vinyl (tiles and sheet goods), Laminates, wood and ceramic
(or porcelain). Each category has highs and lows. Sounds like you want a hard surface, so you can eliminate carpet. Which leaves you with wood and ceramic. Both of which "in general" will be more pricey than vinyl or laminate. The material on wood will be higher than ceramic, whereas the labor on ceramic will cost more. If this is something you can do yourself, then ceramic can be done under the price of vinyl or laminate.

One problem with wood and ceramic is they often increase the thickness of your floor. This is a pain around appliances and doorways.

Welcome (back) to da hood.

I don't think he was giving away two months rent for free. I think he was collecting the yearly mortgage in 10 increments instead of 12. That's just harder to do when you have a monthly mortgage obligation. It's still possible though, you would just have to hold the extra money in escrow.

What did the judge say about the property?

Chris K., Well I guess the ultimate hope is to get the house, drill the locks open, find out all we have to do is replace a few light bulbs to get the U&O. Then turn it over to a property manager to collect some rent (Section 8 Most likely)

But of course, you never know what you are getting with these, it could be a complete dumb. My brother and I have discussed 10k being our limit. If we can get the U&O for under 10k worth of renovations we will keep it. Otherwise we are likely to auction the house for a profit and try, try again.

Just to provide a further update. Per Ned Carey's advice I pursued a Certificate of Substantial Repair, since the property was vacant. I received the certificate two days ago. This will allow me to apply for foreclosure in 60 days instead of 6 months. If my calculations are correct that means that I can apply on July 22nd. So I have also contacted a lawyer (also per Ned's recommendation) and will probably send back his retainer on Monday, after my Brother's review.

The lawyers fee's are pretty upfront and basic $500 in advance $2,000 at foreclosure. He sets me up with a title company to transfer deed for $440. The lawyer also notifies the Tax Sale office of his involvement to ensure that if the tax lien is redeemed his fees are included! This is important for me becuase I don't want the owner to redeem the day I mail the lawyers check out and be on the short end of the stick.

Everything seems to really be moving along pretty smooth!

I will continue to update this thread with my progress. Thanks for all the support!