While more development did happen over the last few years from development projects started in 2021 and 2022 when rates were lower and developers could outlast supply chain issues, the upcoming supply is expected to drop again, as we will discuss later on, with the relatively sharp rise in interest rates that has dried up investment capital due to the fear in the market, sellers opting to hold out on their land and or properties until cap rates and interest rates subside again as is expected in the coming years, as well as banks being cautious to lend on real estate due to this sharp rise putting many projects that were started in 2021 suffer greatly from a 7x increase in rates over the following 40 months that had adjustable rates or 5-year terms which is very common in larger multifamily investing.

Hi Will in Chicago-Congratulations on having a paid off rental with 500K in equity.You are wondering what options may be available to put that equity to work and you are not interested in buying another traditional rental.One suggestion I would offer is to put some of the equity to work by becoming a private money lender partnering with an investor that would split the profits with you on short-term projects.You could turn that money over and over into the next project getting a higher return than the trapped equity and getting a lien position on the project property to protect your downside investing in a fairly passive way.To Your Success!

If yes, then the other partners can just do a JV agreement internally which you can record at closing that allows you to still “partner” up on it but allowing the lender to still be protected if anything goes wrong with the deal or people borrowing. 

I know I want to do this but am suffering from a bit of analysis paralysis trying to figure out if I should jump right in and do small multi-family project or just do a small deal to get my feet wet where if I mess up it wont derail the whole endeavor.

(If you are out of state, you may seriously consider using a good property manager because of screening tenants, vandalism, squatting, and various other reasons -- they do protect your investment).

Lenders that don’t require an appraisal will perform a desktop appraisal but will typically have a very conservative view on the value of the property to protect the company’s investment.

When its included in a lease for real estate then the laws pertaining to residential rental security deposits in your state apply but when its separate you should have more leeway to get some additional deposit to protect you.

👏Regarding subcontractor contracts, it’s essential to have a well-thought-out document to ensure clarity and protect all parties involved.

A professional property manager should handle the heavy lifting, ensuring your investment is protected and profitable without adding stress to your plate.

Hey Steven - An LLC is a solid choice for structuring your partnership since it offers liability protection and keeps things clean when splitting ownership and profits.