All Forum Posts by: Suzanne P.

Thank you @Kenneth Garrett, for your thoughtful reply. I actually do quite a bit of due diligence and this investor has 7 flips under his belt, all of which made a profit. I have not checked in with him yet in detail about how much profit these flips made (compared to forecasts) and how long it took him from start to finish on each deal.

I think I was very unfortunate that one of my previous JV partners dragged me along for 13+ months; that was my first deal and it was set up poorly from a legal point of view (just a JV Agreement, a fixed return, not on title / no deed of trust etc.) Those are definitely critical questions, I totally agree.

@BJ McKellar thank you for your comment also. The property will be / is under the active investor's name while I will be safeguarded by a second deed of trust.So I would not be able to have ownership of this property.

I am currently looking to co-invest with another real estate investor on a flip project in a 50/50 joint venture deal. The other party is the active investor who has found the property and is responsible for rehabbing and selling it while I am the money partner, providing the gap funding after the hard money loan. The arrangement is that we split the profit 50/50 and the forecast return on investment for my cash contribution is over 65% annually for a 6 month flip.

Because I have had bad experiences with another joint venture partner who strung me along for 13+ months on a flip (he was on title and I had a fixed return , so I couldn't get out of the deal until he finally decided to sell) I now aim to work a 6 month exit clause into my JV Agreements. This exit clause gives me a chance to exit the joint venture in case the active investor decides to hold on to the property. I would give the active investor 1 or 2 months notice prior to the expiry of the 6 months so they can find an alternate gap partner if needed.

In these cases, my active investor partners have offered a guaranteed return percentage for the 6 month exit clause that is a bit lower than the originally forecast return (so instead of a 60+ % return it would be a fixed 40% or 50% AROI) but the current investor suggested that he would only be willing to pay a fixed return of 12% for a 6 months exit clause.

Since the overall project is forecast to take 6 months with an anticipated annual return of over 65%, the guaranteed return upon a 6 month exit of 12% does not make sense to me. I fully understand that the active investor would not want to provide a fixed return of over 65%, but to reduce the fixed return to 12% for a 6 month exit does not make sense to me, especially since on other JV agreements, my co-investors have offered fixed returns in the 40 to 50% AROI range (which in all cases is less than the originally estimated annual return).

I am really interested in this project and just want to make sure I don't get dragged along for months and months after the 6 months mark without being able to get out of the deal, and I'd like to make the scenario work for both parties. What kind of arrangement should I suggest to this active investor to give me an option to exit the deal at about 6 months if it looks like the active investor is about to drag his feet on the deal? I'd like to find a solution that works for both the active investor and the money partner. This is rather time-sensitive so I would really appreciate your input.

Thank you @Account Closed, for your comments. I will call you in the next few days. 

Thanks, @Kuba F., I really appreciate your analysis. The numbers you lay out make perfect sense. I would be looking at less expensive areas at the beginning, but the phrase "your out of pocket risk" is reduced has peeked my interest. I'd love to hear more about that....

Over the last few days I have been checking out larger wholesalers in different states as a source of deals, and most provide an ARV, an estimated rehab cost and a gross profit. Some even provide an estimated net profit after hard money financing that they offer themselves.

I am aware that the ARV and rehab cost need to be taken with a grain (or a ton) of salt and the investor really needs to do their own careful due diligence with all the numbers. Since these will be remote flips I will also be working with local project managers to oversee the project, so there is an extra element of cost I need to build in.

If the deals were financed through hard money that would obviously add a significant amount of cost to the project. I would really appreciate your insight on the effectiveness of wholesalers as a deal source and the possibility of financing these deals through hard money. In your experience / opinion, is there enough profit margin in deals from wholesalers that will allow hard money financing and still leave a meaningful margin? 

In some of the less expensive markets I would be able to finance deals from personal funds (without hard money), but I generally prefer not to have larger amounts in any one project, instead I like to diversify and keep my individual cash investments smaller. Any other ideas on financing such out-of-town flips more reasonably? 

Would it, for example, be a good idea to partner up with another cash investor and split the purchase / rehab / holding / closing costs (and the profits) and not have a hard money lender involved?

Thank you in advance for your insights....

Thank you @Manolo D. and @Matt Stewart for your comments. [Solicitation Removed by Moderators]

Thank you @Manolo D., @Josh C. for your comments. I really appreciate everyone's input. Mia, please send me a PM with your ideas.

Hi @Account Closed, thank you for your detailed reply, I really appreciate it. The financial accountability and control aspect is so crucial. That's where a lot of deals suffer. Great input!

Thank you all for your replies, I really appreciate all the input and the specific comments on payment. This is very helpful. 

My partner and I are both located in Canada and have recently taken some extensive training programs on flipping in the United States. In order to get started, we would be looking for for local project managers to join up with.

We would be bringing in the deal (mostly from wholesalers), developing the scope of work, financing and selling it. The role of the local project manager would be to check out local deals prior to purchase, locate and coordinate subtrades, check up on the contractors, and look in on the property regularly and when needed. 

Because wholesale deals go very quickly we would need someone that can have a look at a property very quickly, within a few hours same day. So here are my questions:

- how would we best find such a local project manager?

- what is proper compensation for such services (a lump sum / hourly / a portion of the profits - and if so how much?)

Thank you in advance for your input.