All Forum Posts by: Alex M.

Look into FHA. Both standard and FHA 203k - which provides funds for rehab. Buy a duplex. Ask for a seller assist. $12k should be enough to get you a decent duplex or triplex in some neighborhoods if you can use a seller assist to get you the rest of the closing costs. Once in it, work on your side and improve it so that it can be rented out for more when you move into the next one, but for now, use income on the other side to drop your cost of living so you can build up more savings for the next one.

I have what may be described as "one of those good problems to have". I'm a newbie investor - with one (cash flowing) rented property under my belt. I have a colleague who has some 'extra cash' and has stated a willingness to invest with me, but has asked me to propose a structure to the partnership.

This colleague financed my first deal - with a 5 year balloon at 4.25%. This time around they are looking to have "more of the pie". Meaning, they want to formally partner with an LLC and are looking to find an equitable way to split expenses, revenue and equity. They are not in Philly and would not play a role in finding the properties, fixing the properties, managing the properties, or even selling the properties if and when we get to that point.

What they are willing to do is turn around cash in a few days to fund deals that I can find.

This investor has stated they are not so interested in cash flow, but much more interested in capital gains. My concern with this is it is hard to predict future value of property and I don't want to invest based on an assumption of appreciation. I am trying to grow into being more of a buy and hold cash flow investor. So.... I'm looking for advice from anyone (or recommendations on who to talk to here on BP) that has worked with partners in a similar manner to purchase properties.

I am considering things such as 50% split of all revenue, 50% split of all expenses and 50% split of all capital gains on the sale of the property in a 5 year time frame - based on either cashing out at that time, or me buying them out (although I don't know yet how that could look in a way that made it a cash-flowing property for me still). Has anyone got experience doing this? What works well? What are some of the common problems and pitfalls that I should be aware of? How do I make sure I am not asking for too much, but that I also get both cash flow benefits and long-term cap gains? 

Thanks!

Thanks for all the great and fast responses! 

While I think I ultimately agree with @Account Closed and think the business account may make sense as I scale up, given that this is my first property, I went with the advise of @Ali Boone, @Steve Babiak, @Pari Thiagasundaram , @Michael R.and others and just opened up a separate checking and savings account to keep the security deposit separate from the rental checks. For now it sounds like the biggest priority is keeping my own accounting simple, and not spending money that really is not mine. 

So I am about to collect my first month's (plus last and security) rent on my first property - rental application in, background checks complete, initial deposit provided in the form of a check... but I don't have a bank account yet, other than my personal accounts. Is this a problem?

Is there any reason I should not just deposit these initial checks into my personal account and then work on getting a business account, or another checking account set up later on. Ideally, I would like to get the checks deposited ASAP to keep this moving forward, but don't want to get into any tax issues, etc that I am not aware of.

Also - second question is what types of banking arrangements do most landlords/investors have? Do you set up separate accounts for each property? Is it best to use a regular checking, or is a business checking better? Why?

Thanks!

Great post. Size and comfort with size is a relative thing - I'd feel cramped if every other home around me were big and I had a teeny thing, but after 3.5 years of living in Philadelphia, anything bigger than 14' wide strikes me as being practically humungous now. 

My own house is a 2-story 14' wide, 60' deep row home in Philly and it feels big in comparison to most here. As @Karen Margrave  says, high ceilings make a difference.  With 10' high ceilings downstairs, and 9' upstairs, most people respond when entering that it is a "large" house :) 

in philadelphia county, @vera 

@Vera Rosen undefined