All Forum Posts by: Stephanie Martinson

Hello all,

I think I found a deal!  It's a 10 plex value-add apartment.  I'm in the process of coming up with an offer price so I have a few things I am hoping that someone may know the answer to...

1) I'm including the acquisition fee, closing costs, financing fee, operating account funding, and the down payment for the total equity that I'm planning to raise from my investors.  Do I need to also include the cost for renovations here, or is that pulled out through a loan and then the property is re-appraised after stabilization?  

2) If the property is on the market, do I still give an LOI or do I just make an offer through my broker?

3) I only have about $250,000 in verbal commitments and I need to raise $365,000.  Should I make an offer and assume I can hustle to find the rest of the money, or wait until I have all the verbal commitments?  

Thank you all.  I appreciate your knowledge to help me through this process.  I am scared as hell, but I know I can do it!

Stephanie Martinson

Hi everyone,

I'm analyzing an apartment building, and while doing so, I got to thinking about a question that I had better clarify before going in to further discussion with passive investors...  

For my business plan, I'm thinking an 8% preferred return, and then I'm not 100% sure about the profit split, but since it's my first deal, I thought a 70/30 profit split would be fair.  

My question is this: is the profit split each year after the passive investors get their 8%, then we split the cash flow profit 70/30, and then again on the sale?  Or is the profit split ONLY on the sale of the property?  

Thank you for all your help!

Steph Martinson

@Theo Hicks Thank you for your advice.  Sometimes it's easy to get sidetracked and want to just "do" a deal so that I can build some credibility.  It's a little harder than I had assumed to find a great apartment deal in my market.  Cheers to the joys of real estate investing!  

@Matthew Ryan Thank you for the honest post.  I appreciate that.  I have been running down the rabbit hole, chasing nobody else by myself.  Yikes!  

@John Moorhouse I understand that high school is a cesspool of drama and classes that teach subjects geared toward the mainstream student.  I will say that if you drop out of high school, you are 15/16 years old.  Banks will usually only loan money to 18 year olds, investors will not trust you yet, and seller's may not believe that you have a team set up and that you will go through with the deal.  Dropping out may seem like you will clear the path and start building your business, but will you be working as a laborer for 8-10 hours per day instead of school?  It seems like that may take away from your time as well.  

You could start organizing your business and get yourself prepared.  Build a website, start a blog or podcast, read more real estate books, and start finding a team (realtor, broker, attorney, CPA, etc).  If you have all that ground work done, once you graduate from high school, you can get a running start.  So many people will ask you what you are going to do after high school once you're a senior, and you can tell them that you are going to be a real estate investor- refer them to your website and give them a business card.  THAT will give you private investors.

Good luck.  Keep fighting the good fight.  Maybe you can also start thinking of ways to change the mainstream education system and help the generations below you.

Steph Martinson

@Mark Fletcher I think using your friend's money is totally legit.  As long as you plan conservatively, and be transparent on the deal, you should be okay.  I am in the same situation as you with using private money.  I act like I know 100% what I'm doing for the first deal, and I do, but I am nervous on the inside (what if I mess something up :/).  In the end, I know that real estate is the best way to make money, so I'm just making sure I run, and rerun, all the numbers on the deals I find.  

I'm still searching for deals in my market. I would love to do a BRRRR investment but the market I'm in is a seller's market, and so all the houses are overpriced. I guess I could search for off-market deals, but I'm really focused on multifamily syndications right now.

Good luck!  I say if you find a deal, use your friend's money for sure.  You know it's a win-win!

Steph Martinson

Hi everyone,

There's an apartment building that fits my value-add criteria in my hometown, and I know the owner. He says he doesn't want to sell because capital gains tax will get him... I'm assuming he's leveraged the apartments to a point that he may lose money if he were to sell. He has owned the apartment for around 10-15 years, and many people call them the crack-head apartments because they are pretty ran down.  

Any idea how to alleviate this capital gains conundrum? There has to be a creative way to purchase real estate that works around capital gains a little bit.  I thought about seller financing, but I don't think he's interested in that.  He would do a 1031 exchange, so should I start looking for apartments that aren't value add that he can buy in to and still cash flow?  I'm sure he's got a cash cow, and the deferred maintenance is adding up.  Any ideas would help!

@Jerry W. Hi Jerry, thank you for your response.   I figure there is something in this investment that includes securities.  The investors would be equity investors, therefore I wonder if more has to be involved than just a promissory note.  Maybe I should just look for debt investors on a deal like this?  Is your source for promissory notes located in Thermopolis?

Thank you for your responses.   @Taylor L.  I'm in Northern Wyoming, know anyone?  Ha!  I'm sure I can find someone- my husband works as a commercial lender in a bank- do you suppose I could use a promissory note from a lender?

@Hadar Orkibi I will definitely ask my CPA about the interest liability.  Thank you for that note.  

Hello everyone,

Has anyone ever used promissory notes with investor capital on a property?  I'm looking at a property where I would be using two different passive investors.  The numbers won't work if I have to pay a securities lawyer, so I was hoping to sign promissory notes.  

Thank you for any and all help!

Steph Martinson