All Forum Posts by: William Pelton

@William Pelton I've never heard of that group. REIGN has a virtual meeting on the 3rd Wednesday 6:30-8-00pm. Lots of North Atlanta and Cumming investors.

Will

We bought the land about 6 miles out of Memphis.  We chose that area because there is 10000 new jobs in last five years and another 250000 on the way.  The highways locally just widened and an intermodal rail is now open.

We plan to develop and we chose at my age to only get properties that we can do that in the next 5-10 years.

We do have other land purchased in my thirties that was a long term hold and lots of memories with kids and bonfires on that land.  Good fortune or God watching out for me put a highway open near it and now suburbs join it.  

We have three contracts that close Jan. 15th, so we did not have a partnership agreement (pre-nup haha).

A local closing attorney will probably have a template if you go the general partnership route.  I listen to Sam Zell interviews to educae on real estate and it is all about risk assessment for his decision to buy or not.  A partnership puts your partner's performance as risk on you, so be wary.

You seem to be choosing a manageable buy and just check out other options in the area before you settle. To help decide, go to zoning and industrial development board' offices and they can show you what is coming down the pike.  Usually the folks in those offies are very helpful in our area.

Our closing attorney was going to form a general partnership if we chose that route and under $1000 to do, closer to $500. 

My two cents is: you get five points for pairing with a friend, because of the advantages that brings. However, the points you will theoretically LOSE for going in on a project with a friend ranges from 0 to 6. I for example got deeply involved with a friend (well, a good acquaintance) and didn't do all the DD I probably should have (taking stuff on faith). Fast forward to today: it has been 20 months instead of 9, and I'm $45,000 over budget (I'm the capital partner). I have stayed awake at night and gotten a few grey hairs. 

If you want to get involved with a friend, try to limit your downside by saying Hey I like you and trust you but we have to go about this as though we are not friends, but strangers. Take nothing on faith. If it works out, that's great -- and from what we know of each other, it may very well. But we need to proceed as though it will fail, and thus do a lot of DD, trust but verify, and put everything in writing. 

Feelings can get hurt with friends in a way that is not likely with strangers. 

Having said all this, I have a deal with a friend that has been going on for 3 years and there are no hiccups to speak of. Now, I didn't do a hell of a lot of DD, so it's almost lucky that things are still peachy. 

If you have a good idea and/or skills and/or financial capacity, you might very well be able to find a non-friend to do a project with. 

Man, there are so many bumps and bruises one has to endure on their way up the ladder. I don't envy you! When you see someone who has been active and fairly successful over a 5+ year period, or someone who has 1,000 or 2,000 posts on BP, they merit your respect (all things being equal) because this business can chew up and spit newbies out. That's not to scare you exactly, but to say you have to be very careful. Take off rose-colored glasses and be prepared to take some lumps. 

WIshing you the best, of course :)

My friends and I just did a group purchase.  But we split the land up that was in part chosen because the road frontage allowed us to divide it.  We have three contracts at purchase or you could have one contract (don’t like this option personally), form a type of partnership and absolve after closing with the land split up.

If you go the route you are suggesting, I would suggest an extensive agreement through a lawyer for the what if’s.  What if one of you is no longer able to make decisions, what if one wants to sell and the other days no, what if one wants a $50000 gate and the other no gate, what if one gets divorced and it was not their wish?  The list is never complete, this we partner on the search, but separate at closing.

Hope this helps.

Dennis

I can count on exactly one finger the number of friends I have with which I would attempt this. I've known him since the 6th grade, and we both have a lot of experience in REI and construction, and he would probably still tell me I'm nuts.

Even if you have a great friendship, that's a massive project to work towards and a lot of outlay before you'll see cashflow, at which point you'll have an active business, not necessarily a passive one.  Given your age and financial position, I would pick off some smaller deals to generate passive income, and then go build the dream vacation rental business.  Whatever you choose, best of luck!

- jm

Hi William,

I came across this today and ironically I too live in Cumming,Ga AND was speaking with my wife about a strategy similar to this. The timing of this was very ironic!

Nonetheless, I would like to shed light on a few areas worth taking into consideration. That market has gotten very hot over the past 12-24 months much like everything else. We just bought our first property in Ellijay and paid well above asking price. We also had to act quick..saw the property day 1 and put in a competitive offer to win. 

With regard to buying land and building, this strategy can work at least I'd like to think so. However, there are some downsides to factor in. One is you'll be tying up $ with not ROI for at least a 6 month period. You'll likely have to manage a contractor who will need their hands held each step of the way. Dates will be missed, etc. thus resulting in delayed returns. Consideration should also be given to how the land would be broken up - I believe (anyone please feel free to correct me) you will want to break the land into parcels so if you want to sell one or two properties and hold on to the others you can do so.

I too would like to learn a bit more on this subject as I am fairly new to this “world” and have a lot to learn!

best of luck - AJ