All Forum Posts by: Patrick Johnson

Quote from @Rick Baggenstoss:

I have partnered several times with investors.  Clarifying the roles and contributions is essential.  I would mention the roles even if the contribution / pay for these roles is $0.   Over time, it shouldn't be $0.  

For example, if you bring your partner a $200k house for $150k, will you get paid $0?  At some point, you'll stop bringing the deals because of the disincentive.  

@Patrick Johnson you might want to clarify FHA rules. The partner contribution may be an issue with this loan. It will also have to be move-in ready (not much room to add value) and fiercely competitive. You might want to adjust to 20% down payment from partner and decrease it if possible.

OK. Thank you for that. I'll do some more research on that. Addressing the partnership example you mentioned, in that situation with a $200k house brought to a partner for $150k, would an example of that partnership be the partner paying the person who found the deal and brought it to them maybe a $5k-$10k finders fee, fronting the 100% down payment and closing costs, being paid back 100% of the cash flow until half of what was fronted is paid back and then being 50/50 partners in the property going forward?

Quote from @Steve Vaughan:

Quote from @Patrick Johnson:

Quote from @Steve Vaughan:

Quote from @Patrick Johnson:

Figure out how to collateralize or secure the funds for the 3 months pre-purchase and your chances of finding a partner will greatly increase👍

@Steve Vaughan Thanks for that! Making sure I have a proper understanding here, by 3 months pre-purchase do you mean 3 months of reasonable reserve of what the property would cost (estimated of course)?

 When you show a lender 3 months of bank statements to qualify for the mortgage,  the funds need to be in your account the whole time.  

 Ah, understood. None of the lenders I've spoken with have mentioned that to me, which is odd. That's very good information to have.

Quote from @Steve Vaughan:

Quote from @Patrick Johnson:

What are the ways in which a deal can be structured to be beneficial for both parties in the following situation:

I am interested in and have the capability to find a small multifamily (2-4 units) property in Georgia that will cash flow quite well. I would source my own off-market leads and would lock the property down at a price that would yield upwards to 15% CoC. If someone else (Family, friend, investor) were to put up the full down payment for an owner-occupied friendly mortgage (I would live in said property, say FHA 3.5% DP), what are the ways in which that person could benefit or be paid back? How do I structure a deal that would actually be worthwhile for them and not just them essentially loaning me the money?

I or others like me would like to be able to assist with a reasonable rate of return expectation, but it's the seasoning period the borrower/buyer (you) must have the funds in your bank account that gets me.  This can be 3+ months plus an explanation for the source of funds, which can't be borrowed. 

Figure out how to collateralize or secure the funds for the 3 months pre-purchase and your chances of finding a partner will greatly increase👍

@Steve Vaughan Thanks for that! Making sure I have a proper understanding here, by 3 months pre-purchase do you mean 3 months of reasonable reserve of what the property would cost (estimated of course)?

@Rick Baggenstoss Yes I'm

coming moreso from the

perspective of house hacking a

2-4 unit to start, and needing the

assistance for the down payment

necessary to secure 3.5% FHA,

FTHB mortgage. It would be a

completely passive venture for

my partner. I would source my

own off-market MFH that would

cashflow reasonably for this

purpose, negotiate, secure and

close the deal, and renovate with

my own proceeds for a mix of

traditional and STR's to

maximize profits. I do like the

structure here you have

suggested, just with a 3.5% cash down payment instead of

20%-25% (~$10k-$20k I would

imagine for a >$550k triplex or

quad here in GA).

In your experience have you done something like this before, or similar?

@Jacob St. Martin Ah. With your STR's, are you looking for single family only or multi-family with the intention to house hack one and STR the rest?

@Jacob St. Martin Thanks. I understand. Would you be the owner 100% on paper outright from the beginning? So I'm assuming there'd be a written agreement outlining this, and what happens once you become 50/50 partners depending on what everyone desires? As in, if they have no desire to be an owner, you could just continue the arrangement until you pay them back in full, plus a certain interest amount? Or if you decide to go short term rental on a unit or two which could create even larger profit margins maybe they'd want to stay in?

What are the ways in which a deal can be structured to be beneficial for both parties in the following situation:

I am interested in and have the capability to find a small multifamily (2-4 units) property in Georgia that will cash flow quite well. I would source my own off-market leads and would lock the property down at a price that would yield upwards to 15% CoC. If someone else (Family, friend, investor) were to put up the full down payment for an owner-occupied friendly mortgage (I would live in said property, say FHA 3.5% DP), what are the ways in which that person could benefit or be paid back? How do I structure a deal that would actually be worthwhile for them and not just them essentially loaning me the money?

Thanks in Advance

I'm located in the Atlanta area. I would recommend joining the local REIA's. There are several groups that offer knowledge for attendance. Networking in this market is key. Check REI Tap. Unsure if they're still doing it after COVID but it used to once a month and it was a meetup at a local eatery. Feel free to reach out. I'll take you up on that free coffee whenever haha

@Gary Ryan Herndon I would agree with some of the above answers, in that you should find a new lender. I have a good one to refer if you find yourself in need of one.

Originally posted by @Bryant Brislin:

@Patrick Johnson we mostly just need boots on the ground for pictures, and we usually pay a flat fee of $40 for about 30 pictures and maybe a short video of the house.

Yes, for my purposes that's what I normally need them for as well, just photos and videos of the property exterior elevations and interior elements. I haven't minded paying for the more expensive services of a contractor to go out and take said photos and videos as they moreso know what to look for but I've begun to believe that maybe that's not necessary in every situation