All Forum Posts by: Tommy C.

Thanks for the input Chris.

I agree that the refinance on the backend is crucial...

I put some more thought into this and adjusted the structure that aligns better with this principle:

Equity Split:

• Me (the sponsor): 10%
• Three investors (combined): 90%

Preferred Return:

• Investors: Offer them a preferred return of 8-10% annually. They receive this return before profits are distributed.

Profit Sharing:

• After the preferred return is met, profits could be split as follows:
  • Investors: 80%
  • Me: 20%

Exit Strategy:

• After 5 years, I could either sell the building or refinance. At that point, distribute profits as follows:
  • Investors: 80%
  • Me: 20%

Fees:

• During the holding period, as the sponsor, I could receive management fees or acquisition fees.

This structure allows investors to benefit from the upside potential, both during the holding period and upon exit. The profit-sharing split on the back end ensures that they are rewarded for their investment and participation.

Like you mentioned Chris, giving your investors a significant portion of the profits on the back end is important to align incentives and make the deal more appealing to them.

Thanks!

Hey BP,

I’d like some feedback on how to structure a syndication deal on an 8 unit MF for rent apartment with myself and 3 outside investors / friends. I've never syndicated a deal and only have some basic knowledge of the process. I've never been on the preferred end or the promote end of any deal, so I’m curious how to structure it in an appealing way. 

Ideally this deal would be put together for the 20% equity required to finance the new build. I have multiple parcels in mind that are appropriately zoned for this type of structure. 

At a high level, I believe this is a an 11.5% cap and 10% IRR immediate cash.

Here are some more details: 

• - Yearly NOI = $120k
• - Deal ends after 5 years
• - $120k x 5 years = $600k
• - $600k - $400k = $200k total gain => (5 year gain - initial investment = total gain)
• - $200k gain / 4 people = $50k per person
• - $50k gain per person / 5 years = $10k per year (or 10% IRR)
• - Quarterly immediate cash payouts from rents will be paid back to investors upon receipt.

Would this deal make sense? Does anyone have any resources on what a typical agreement looks like? 

I want to get a sense of what a favorable offering would look like for 3 outside investors. The benefit for me is that I would own the building outright after year 5. 

Any tips would be appreciated,

TC

Hi BP!

I'm looking to buy a home for $90k off a REO auction posting.

Curious to know if I have any options to finance this purchase as I do not have the liquid cash to put down on this investment. I can put down $20k but not the full $90k.

The bidding ends in 4 days. Does anyone have any tips on how / where to finance this fix 'n flip? 

Thanks!

@Bruce Woodruff thanks Bruce! Doing this today :)

@Karen Margrave thanks Karen, these are all really solid points I appreciate the feedback.

Hey BP,

I need help finding a builder for ground up construction of a 4 unit townhome development in the Detroit area. How do y’all find quality GCs that can run with ground up development from start to finish?

I have the financing side of things squared away through a private lender.

Assumptions:

- Building rate is $200 / sqft.

- Land is already purchased with the appropriate zoning and setbacks for the desired floor plate.

- City has approved preliminary designs.

Any tips, connections, or suggestions would be appreciated.

Cheers ✌️

@Bryan Mitchell @Justin Winn thanks gents for the input

Hey BP,

Financing question here - I’m looking at buying a duplex in a college town and renting it out to college kids. There’s a seller who has two duplexes on the same street, one rented, one vacant, and I’m curious to hear suggestions on buying them both, as a package deal, or just buying one individually. The numbers make sense on both.

My problem is that I’d like to put down around 5% which would be possible buying the one but I’m not sure how to finance the second as I’d likely have to put down 20% being that it’s a second home / separate purchase.

Important to know that I’m a first time home buyer and could owner occupy one of them.

Any suggestions are greatly appreciated.

-TC

@Riaz Gillani good to know! I’m going to sign up for an account now. Thanks for the tip Riaz! Happy Hollidays / New Year!

@Sean Thompson thanks for the insight Sean. This is very helpful!