All Forum Posts by: Patrick Zane McLure

I'm not really sure. I can see it being better both ways depending on how you look at it. On one hand, you would get income to cover your expenses if you bought an existing building. On the other hand, if you built it, you would have a brand new building and wouldn't have to put as much away to pay for capital expenditures and other repairs. 

Since he will be doing the building we won't have to pay a contractor so I imagine it will cost us much less than it would traditionally. I really just depends on the deal you find for an existing building you want to fix up.

@Mario Am We are talking about building the units. Her dad has built several houses throughout the years and already has paid an engineer for the site plans. I think a 25 or 30-year loan is what we are going to go with now. We just got finished talking about it and he agrees that 15-years payments would be too high.

@Bjorn Ahlblad Rent will be $1,000 for each unit and since there will be 10 units (5 duplexes so 5 x 2) the total income will be $10,000 monthly, before expenses. He is doing most of heavy lifting and we are not expected to provide a down payment. She and I are going to be Property Managers. Do you still think we should ask for 10% of the total rent? That would make it 50%, to 25% and 25% split. 

@Justin Robert It's split 60% to him, 20% to me and 20% to my girlfriend (his daughter). When he dies my girlfriend would get his 60%. I did the math and with a 15-year note, the payment is around $8,600. With $10,000 monthly income this doesn't give much room to work with so I'm thinking about pushing for a 30-year note which would be around $6,100. We want to make the payments and then pay off the principal for the next month or two each time to help avoid the interest paid. I'm thinking this gives us more money to do that and be able to put money in an account for future repairs and vacancy. He wants the loan to be paid off before he dies and he doesn't like long term loans so it will take some convincing to do.

He has a great relationship with a lender he has been using throughout the years. It was my understanding he wasn't planning on making a down payment but I could be wrong on that. We are all going to sit down and go over the details this weekend. This is all very early in the making. 

We will be building 5 duplexes. 

My girlfriend's dad approached her the other day and asked her if we would be interested in being partners with him and being the property managers for a 5 unit duplex. I have been wanting to get in the real estate rental business for a while now and have been looking through the forums here, listening to the podcast, researching strategies, and have read several books to expand my knowledge on real estate and the does and don'ts. Her dad has been in the real estate game for 30+ years and has units all over town and has built 40+ houses throughout his career so he knows the game. 

He already has the plans approved and owns the land so we just need to get a loan, which all of our names will be own. We will split the deal with 60% to him, 20% to my girlfriend (his daughter), and 20% to me. He said we would need to obtain a 1 million dollar loan to finance the deal and the interest rate would be 6%. He wants it financed for 15 years and use the money we make to pay off the loan ASAP. I'm worried that the payments would be too much and was looking at more of a 22-25 year loan so he could pay off the principal faster but I'm not educated enough on this to know what the best way to go about it would be.

I'm just curious what the best way to finance the loan and for how many years would be best. Do we need to refinance the deal after a certain amount of years? How can we pay off the loan and start getting cash flow the quickest? Any questions and/or suggested are much appreciated.