All Forum Posts by: Severin Sadjina

*) Please no condo discussions. This is in Norway, things are bit different over here :P

Hi!

A bit of a Backstory (optional)

After having gotten my first deal (a small rental) this summer I was a 100% hooked. So I started looking for new deals, and luckily the market here in Norway is quite slow at the moment, so let's go shop!

But I quickly realized that saving up to buy more rentals all by myself was a much slower process than I would have liked. So I started thinking about how to get more money for weeks, and after several (almost) sleepless nights I finally got it (with a little help from something Grant Cardone said on a BP podcast): I need money to invest in real estate, but I doesn't have to be my money! It doesn't have to be on my budget! And once I realized this, it took me about 3 days to find someone with enough cash that was willing to partner with me. I actually went from "damn, where do I get money to buy something small" to "damn, now where do I find the deals to put all that money into?". (Before you get too excited, we're talking larger condos as student rentals here, so definitely no big boy stuff. Yet.)

The actual Request/Question

We are currently having a lawyer draft up a contract to define the partnership (as private persons, no company structure yet), and it would be very helpful to me if you could look over the main points and give me feedback! So I know I'm not screwing myself over here.

The main deal structure is:

1. Partnering up to invest in buy and hold, condos as student rentals.*
2. Partner brings all the cash needed to acquire the property (down payment, fees, deed registration, ...). I bring no cash to the table. Otherwise he is mainly passive.
3. I find the deals, analyze them, and buy them. And, in the end, sell them.
4. I take care of property management, finding tenants, signing contracts with them, maintenance, repairs, etc.
5. We split everything 50/50, ownership, mortgage, expenses, net cash flow, amortization, capital gains, ...

Now there are three points specifically that cause me some headache. It would be awesome to get input on those:

1. The lawyer suggested that my partner's capital (used to acquire the property) grows with the consumer price index (CPI). For example, if we sell, he won't just get the initial money back, but it will be CPI-adjusted. Too me that sounds a bit weird seeing as the whole point of investing in RE is to make significant more than the CPI, and he will get plenty with the cashflow, amortization, and capital gains on top of his initial investment.
2. My partner has about 1/4 of his capital tied up in a savings account. He has received tax benefits from this over the years, which he would need to pay back if used on an investment property. He wants me to split that cost with him. I think that is his cost of business, and not my problem. Then again, we need that money if we go do something together. But it just seems weird to me.
3. The lawyer suggests that I am not liable to my partner's capital in case of a loss. For example, if we had to suffer a larger loss, we would split that loss (according to the 50/50 idea), but I would not participate in splitting his loss of initial capital (the money he put down). For me, that's great as it greatly reduces my risk (otherwise, worst case, I'd have to pay him back 50% of what he put in), for him, maybe not so much.

So, what do you guys think?

Spot any obvious red flags?

Looks good?

I greatly appreciate any input here.

Regards from the far North,

Severin

@Don Konipol Thanks, Dan, that I do understand. But I am wondering how you would sell people on using an ICO to fund a property? What's the point/use of having your own coin in that scenario? What would the Blockchain be used for?

I mean, I see how this sounds great from the receiving end, but again, how'd you justify needing a dedicated coin for this?

Hi!

I'm just in the exact same process. I bought a modern studio apartment in the center of my local city (or town really, this is little Norway, after all...) and it seems that most people would rather rent it furnished. I am also looking to get everything from Ikea. A.) because it is a good deal cheaper than other furniture stores, and b.) I can order it all in one place and have it delivered to the door. I could save quite some money going for second hand stuff, but then the pieces probably won't fit each other and it takes a lot more time and driving around.

@Chris Welch So you say 500/year for replacing items. But that is only out of your pocket (that is, doesn't include what the tenants covered via their deposits)? And how much was the total cost? Personally, I wanted to budget for the total purchase price over three years, meaning I'd assume that I'd need to replace any item after 3 years on average. But I may be completely off... Any input is greatly appreciated ;)

@Quinton Slay There is, of course, a tougher reality that is probably painful to admit and face: maybe she just isn't compatible with you, at least in that arena. Whether you can live with that or decide that she may ultimately hold you back, thank her for the years together, and move on, that's up to you to decide.

I'm starting to question this myself lately for my situation. For me, it's a bit too early to really say, plus we have two young children, so I'm somewhat involved at this point :D

Well, there's your answer.

Just DO it, SHOW her what you are so far only talking about, and why it's so awesome. Much more powerful than just telling someone. And if you succeed and are true to your word, my guess is she will get more interested and excited.

You may need some patience until then.

I have a somewhat similar situation: I wanna really push for financial independence within the next 10-15 years, and my girlfriend doesn't get it. I'll just keep pushing and hopefully be able to show her one day why this is all so great.

Hi @Thomas Knutsen and hi again @Morgan Nilsen!

I just got into the whole thing here in Ålesund, and just invested in my first rental property. I would love to exchange ideas, strategies, and networks with you guys (except I'm afraid the latter is still not very large at all)!

I am very interested to learn about the specific aspects and technicalities of REI in Norway, as well as fixing up properties.

One thing I've lately wondered about is whether "seller financing" is a thing in Norway. I've asked a few agents, but so far the responses were sheer horror and/or disbelief :D

I would also love to hear about your AS and the financing you could acquire for it, @Thomas Knutsen!