All Forum Posts by: Stefano Grottoli

Hi! Does anyone have worked with a Fannie Mae HomeStyle lender in North Jersey? If so, can you please PM me your contacts, and also share your experience?

Thanks!

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Hi everyone - I'm wondering if fix and flip is still a profitable business in the areas within Essex, Morris, Union and Hudson counties (or close to these areas).

Any inputs are welcome! I'm looking to start investing in Real Estate through fix and flip in the area, buying a property of around 100k to 120k for my first deal.

Appreciate any comments from flippers in the area! Thanks!

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Originally posted by @Rich Cavanagh:

Originally posted by @Tae C.:

@Stefano Grottoli

Who would be actually managing the rehab? Who would find and bring the deal? I think those types of role definitions would play a factor in the profit split.

This! ^

Make sure you take the time and break down every detail. The responsibilities of each individual as well as how you will handle multiple unforeseen bumps in the road. What happens if you need more cash for closing? If you need more cash for rehab? who is responsible?

This is where a lot of people go wrong with partnerships. Some people are skiddish about putting these scenarios on the table for discussion and getting them in writing but its not out of mistrust....or shouldn't be if you are seriously considering them as a partner. The reason for a detailed plan / breakdown of responsibility is to clearly and swiftly set a standard for the course of the partnership and then squash any potential breakdown later on down the road in case either partner forgets what was agreed to.

Personally, I like a percentage based split. 60/40 for example. They may be more comfortable with that as well. Rehab numbers can be off. Especially when you are new. Percentage based splits make it feel like you are more in the game together in case the numbers are off...for better or worse. At least IMO.

Thank you! I absolutely agree with you, and thank you for the insights. I will probably go for something like 50/50. Just wanted to get a sense if I could start in the business with the amount of money that I have, and now I'm more confident that yes, I can (and will). Thank you so much!

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Wow! Good job!!! The house is beautiful!!! I hope you get a good offer soon! Is there anything you learned from this specific project that you would advise to a newbie like me that is looking to do a first flip?

Thanks!

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@Brian Schmelzlen agree! This was just an example. I understand that there are a LOT more things to consider. Since I'm a total newbie to this, something I'd look for in a partnership would be to learn a lot from my partner as well. So having a 50/50 starts to make much more sense. Thanks for your inputs!

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@Andrew Kerr you're absolutely right! I also want my partners to have a great deal as well! I don't want to play smart or anything, just want to be fair for both sides.

Just wanted to throw the idea and see if at least that make sense to make a partnership with that model. Currently at the level I'm at, I would do it anyway, specially if I'm able to learn on the way with my partner, and if that deal can make us build more than a partnership (i'm a big believer great friends can be made this way as well).

Thank you so much for the inputs! It didn't discourage me, it did the opposite. At least I know I'm heading on the right direction, and have a starting point! I have as a goal to do at least 2 flips during this year so I can start to build my rental portfolio from 2019 on.

Thanks!

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I think I got it. From a ROI perspective, it wouldn't be balanced correct?

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@Andrew Kerr Thanks Andrew! Please, see my other answer. In my point of view, I'm putting 100k into the deal and my partner 40k. Am I wrong?

But it's definitely interesting to understand and learn from different point of views. Thank you so much!

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Originally posted by @Brian Schmelzlen:

That is a workable strategy if you can find a partner willing to do it.

Although the loan would be in your name and thus there is more potential risk for you, you have to consider the fact that any potential partner would (probably) be looking primarily at how much cash you are both putting into the deal. If I was putting in twice as much cash as my partner, I would not want only 29% of the profits.

I think the fact that you have the mortgage in your name and would be putting up 1/3 of the cash is a good argument for it to be a 50/50 partnership. If you can negotiate a better deal with a partner, go for it, but that is my thought.

Also, I would spend a lot of time courting the right partner. You are essentially marrying the person, so make sure you both are comfortable with each other and can work well together before either one of you commits so much money.

Thanks for your inputs!

One question though - I didn't put half of the money into the deal - at the end of the day, I put 100k into the deal, and bought the whole house, which If I hadn't, we wouldn't even have a house to work on. Let's say I got a personal loan from a friend of mine on the whole 100k and would buy a house with that money into the same partnership model. It doesn't matter where my money is coming from. I decided to get it through a mortgage, which I will pay fully myself. Am I wrong?

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Hi everyone! As I'm new to real estate investing and to BP, I've been reading and educating myself a lot before going into anything solid, but I do want to start as soon as I feel ready to.

Sorry if this post is really basic, but wanted to hear your insights and ideas on this.

I currently have around 20k to invest only and a really good access to credit, so I've been thinking a lot on how to make a partnership with such money work for both me and my partner. So I thought about a strategy and wanted to hear your thoughts on this if this makes sense or if doesn't.

I'd like to start with a flip, and my main concern would be about renovation costs, as they usually are not included in mortgages. So I thought about a partnership where I would come up with the mortgage to buy the property, and my partner would come with the money for the renovation. So just an example (of course these are rough and hypothetical numbers just to exemplify the idea, and not the numbers)

Purchase cost of the house = 100k (I can make a 20k down payment, and finance the other 80k).

Renovation costs = 40k (which will come from my partner)

After repair value = 200k (sticking to the 70% rule just for an example)

In this example, that would give me 71% of the partnership and 29% to my partner giving us roughly (just some HGTV calculation, but I do know there are lots of other costs, but again, I just to exemplify the strategy) 43k of profit to me (after paying out the whole mortgage) and 17k of profit to my partner.

Do you think this would be a doable strategy? Do you think this can work? Am I missing something here? Again, I do know that there are several other costs to consider (holding costs, closing costs, fees, insurance, etc, etc ), and market conditions, etc. Just need your inputs in the partnership model.

Any thoughts will be greatly appreciated.

Thanks!

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All Forum Posts by: Stefano Grottoli

Stefano Grottoli has started 10 posts and replied 78 times.

Post: Fannie Mae HomeStyle lender in North NJ?

Post: Rehab and Flip in NJ (Essex, Morris, Union and Hudson)

Post: Partnership Model - do you think this would work out?

Post: First Flip - Boston, MA

Post: Partnership Model - do you think this would work out?

Post: Partnership Model - do you think this would work out?

Post: Partnership Model - do you think this would work out?

Post: Partnership Model - do you think this would work out?

Post: Partnership Model - do you think this would work out?

Post: Partnership Model - do you think this would work out?