My new Real estate partnership

[Drawingdead]

One of my best friends and I started a real estate partnership.

He is a Jack of all trades can completely renovate a house from the bottom up for dirt cheap. He also owns 7 properties already, the problem is he’s not broke at all but he’s cash poor. He just doesn’t have a lot in his savings and he’s not going to refi a property at current rates from 3%.

I on the other hand have access to about 100k in stock investments but I’m not nearly as good at Reno houses not have I ever owned a rental property. I’m putting up 25k to buy our first two unit, he’s putting up maybe 5k.

I’m trying to figure out a fair partnership for this kind of set up where I’m bringing a fair amount of money to the group but he’s bringing many skills then I have. We tossed the idea of buying a fixer upper,(which he just renovated an 3 unit) and refinancing so I can get my money back which I would roll over into another unit.

I would appreciate any advice.

[Dan Druff]

My advice would be to wait on this.

It appears we might be on the verge of another 2008. The real estate market is very shaky right now, after years of appreciation. Some of the appreciation was artificially spurred by COVID and the financial support people were getting from the gubbmint. (Vacation homes also went WAY up in value, as people suddenly saw the need for owning a resort home they could use when everything else was shut down.)

If you do this partnership as stated, you should make it based upon the financial amount you are putting into it, versus him, and then come up with some sort of payment to him each time he renovates a property. If you wish to avoid determining this each time, you can also give up a few percentage points to him, but don't make it that much, or you're getting screwed. Handymen are useful to have in a real estate operation, but they are not particularly expensive nor hard to find. The person with the capital to invest is the most valuable, the person who is best at finding actual "deals" is second most valuable, and the handy person is the distant third.

Furthermore, while this is unrelated to the partnership, you should find a way to check the credit of applicants. There are services which do this, but it might be too expensive for you if you only own 2 units. At the very least, you should have applicants check their own credit and send you the full report. Do not rent to people blind, or otherwise it's a recipe for getting fucked and going through an absolute hassle. Tenant quality is huge when it comes to the ability to run small rental businesses properly and as hassle-free as possible. Also, make sure you take pictures of the unit before renting it (during the walkthrough with the tenant), take an adequate security deposit, and have them sign to the condition of the unit when they take it. Very important to cover yourself.

There is a lot of confusion in the general public regarding landlords and tenants. Some believe landlords are greedy assholes who always screw people. That's definitely true of some landlords, but it's also true that many tenants are deadbeats, scammers, or simply won't take responsibility for damage they caused. There are a lot of shitty people on both sides, so don't be one of them, and avoid dealing with people who appear to be shitty.

GL

[Drawingdead]

My advice would be to wait on this.

It appears we might be on the verge of another 2008. The real estate market is very shaky right now, after years of appreciation. Some of the appreciation was artificially spurred by COVID and the financial support people were getting from the gubbmint. (Vacation homes also went WAY up in value, as people suddenly saw the need for owning a resort home they could use when everything else was shut down.)

If you do this partnership as stated, you should make it based upon the financial amount you are putting into it, versus him, and then come up with some sort of payment to him each time he renovates a property. If you wish to avoid determining this each time, you can also give up a few percentage points to him, but don't make it that much, or you're getting screwed. Handymen are useful to have in a real estate operation, but they are not particularly expensive nor hard to find. The person with the capital to invest is the most valuable, the person who is best at finding actual "deals" is second most valuable, and the handy person is the distant third.

Furthermore, while this is unrelated to the partnership, you should find a way to check the credit of applicants. There are services which do this, but it might be too expensive for you if you only own 2 units. At the very least, you should have applicants check their own credit and send you the full report. Do not rent to people blind, or otherwise it's a recipe for getting fucked and going through an absolute hassle. Tenant quality is huge when it comes to the ability to run small rental businesses properly and as hassle-free as possible. Also, make sure you take pictures of the unit before renting it (during the walkthrough with the tenant), take an adequate security deposit, and have them sign to the condition of the unit when they take it. Very important to cover yourself.

There is a lot of confusion in the general public regarding landlords and tenants. Some believe landlords are greedy assholes who always screw people. That's definitely true of some landlords, but it's also true that many tenants are deadbeats, scammers, or simply won't take responsibility for damage they caused. There are a lot of shitty people on both sides, so don't be one of them, and avoid dealing with people who appear to be shitty.

GL

Thank you I will take everything you said into consideration

[Sanlmar]

My advice would be to wait on this.

It appears we might be on the verge of another 2008. The real estate market is very shaky right now, after years of appreciation

you want to look back at history to find a period that is most similar to today so that we can gather clues about what we can experience in a extended period of inflation and recession.

We are not experiencing a redux of 2008. That is a difficult period that just happens to be convenient to short term memory. We are experiencing something more similar the 1970’s.

We are going to battle hard to preserve our wealth that ordinarily would be growing smaller because of inflation (& compounding effects of inflation).

Real estate and especially rental real estate did very well during the ‘70’s

We can find some charts from on Fred Economic Data later when we aren’t drinking.

Love hearing the boots on street stories.

I took offense at the “maintenance and construction is a throw away” item in the hierarchy of assets brought to bear in real estate.

I need to learn to grout and not fuxt it up. Never done it and I’m not giving income to someone else. Margin is everything.

Tommy Vu was right

[sonatine]

My advice would be to wait on this.

It appears we might be on the verge of another 2008. The real estate market is very shaky right now, after years of appreciation

you want to look back at history to find a period that is most similar to today so that we can gather clues about what we can experience in a extended period of inflation and recession.

We are not experiencing a redux of 2008. That is a difficult period that just happens to be convenient to short term memory. We are experiencing something more similar the 1970’s.

We are going to battle hard to preserve our wealth that ordinarily would be growing smaller because of inflation (& compounding effects of inflation).

Real estate and especially rental real estate did very well during the ‘70’s

We can find some charts from on Fred Economic Data later when we aren’t drinking.

Love hearing the boots on street stories.

I took offense at the “maintenance and construction is a throw away” item in the hierarchy of assets brought to bear in real estate.

I need to learn to grout and not fuxt it up. Never done it and I’m not giving income to someone else. Margin is everything.

Tommy Vu was right

this rings true to me tbh.

whats interesting is the hallmark 70s dystopia vibe was being forced to wait hours in gas lines. that was the stinger for a lot of people; there was no remote work, there were no EVs.

but again i think that this bull element is going to be very localized to areas that can support it, and those areas are going to directly benefit from people spending their home equity. and everywhere else in between the coasts is in for some mad max shit.

again, ironic, considering the los retardos aversion to socialism; nothing but robot tax funded UBI is going to save them. which they will vote down. lol. lmao.

[sonatine]

also boots on the ground tidbit; friend put his house on the market a couple of weeks ago. LA suburb. zillow estimate at like 1.4m. was worried because everyones been saying the boom has been over for a couple of months etc etc.

first offer was market price and it arrived within 48 hours. then, before they had time to sign, they got a counter offer for market + 5%. cash deal from a developer, they are going to demo the place and build a mcmansion there basically and flip it to basketball players or something i guess. escrow arrived a few days later.

point being.. we love to obsess about the data coming out of areas that represent the highest outlier trends, and we assume that when those places revert to mean, somehow it will be some sort of meaningful market-wide epoch defining event.

but i get the feeling that if we re-scale those trends to reflect not volume of transactions or delta between houses available then and now or even house price, and focus entirely on how much actual money got spent, the peaks and valleys we love to spaz about would look less dramatic, not more.

or druff is 100% right and everything collapses 40%+ across the board. but without some sort of specific catalyst that radically alters the economic/social fabric of america, eg the US military invading mexico and wiping out fentanyl / meth production AND someone binking a one time coronavirus shot that lets everyone move back to the cities or, i dont see anything 'fixing' housing prices as much as just using them as some sort of anchor for other economic initiatives, eg bleeding excess liquidity out of the economy over the course of a decade or two.

[garrett]

also boots on the ground tidbit; friend put his house on the market a couple of weeks ago. LA suburb. zillow estimate at like 1.4m. was worried because everyones been saying the boom has been over for a couple of months etc etc.

first offer was market price and it arrived within 48 hours. then, before they had time to sign, they got a counter offer for market + 5%. cash deal from a developer, they are going to demo the place and build a mcmansion there basically and flip it to basketball players or something i guess. escrow arrived a few days later.

point being.. we love to obsess about the data coming out of areas that represent the highest outlier trends, and we assume that when those places revert to mean, somehow it will be some sort of meaningful market-wide epoch defining event.

but i get the feeling that if we re-scale those trends to reflect not volume of transactions or delta between houses available then and now or even house price, and focus entirely on how much actual money got spent, the peaks and valleys we love to spaz about would look less dramatic, not more.

or druff is 100% right and everything collapses 40%+ across the board. but without some sort of specific catalyst that radically alters the economic/social fabric of america, eg the US military invading mexico and wiping out fentanyl / meth production AND someone binking a one time coronavirus shot that lets everyone move back to the cities or, i dont see anything 'fixing' housing prices as much as just using them as some sort of anchor for other economic initiatives, eg bleeding excess liquidity out of the economy over the course of a decade or two.

This makes me sick to read and why/how you yourself actually justify moving all you're money offshore, Die With Zero is Bill Perkins not everyone else. Punks stuff not respecting MONEY period PUNK stuff PUNK LOGIC pathetic. You respect every penny you have not DIE WITH ZERO wtf is that. You have too much if you're trying to lose it like that then. And sooo you know Billionaires were/are currently too and were unloading their Fortunes Offshore to ASIA we aren't stupid but apparently rich punk kids exist filthy trust fund punk idiots too exist too lucky right haha oh well. Everyone's watching wake up now Cryptocurrency too so. So they can sail off in a decade or more, or live both Continents and it wont happen now its obvious. And how they were doing this was utilizing Cryptocurrency to WASH their FORTUNE offshore literally, via MONEY WASHING and Cryptocurrency NFTs (Ethereum) so now you we all know well us Genius might idk bout the rest of you all but this is ABC happening oh well, hate me you already did anyway.

Watch how nice life is when you have ZERO most us been there so you'll live oh well right...Die With Zero

[4BET]

What state are you in where a 2 unit is 30k or is that just down payment?

[Drawingdead]

What state are you in where a 2 unit is 30k or is that just down payment?

Just a down payment

[4BET]

I disagree with Druff about another 2008, The market is softening but no 2008 is coming

Prices have gotten way to high so we sold a few dumps that we were in the process of rebuilding and said F it will relax for awhile. As we have rental income.

When everyone stops buying that’s when you jump in,best prices more negotiation power etc

So I agree wait but not to long. Our plan is to buy 2-3 more dumps to rebuild early next year

Really you need to know the market, If you see a great buy jump on it, I still look everyday

So even though we are waiting for things to pull back a bit not afraid to buy today if the right deal came along

I know this don’t touch on your partnership but I will post later how we got started

[Drawingdead]

things are still selling in S.East WI. Everyone is moving from Illinois to Wisconsin to avoid taxes. Our houses are still selling in a short time even with high rates.

Ill property taxes are 6-15k on a house. My 230k house has a property tax of 2900. Like AZ is growing because everyone is leaving CA.


These kinds of issues are why I’ve started a partnership with my friend who’s already in the business. I have seen a few places dropped 10/15k already but they’re in terrible areas so I wouldn’t consider one of those

[4BET]

In 2015 we bought our house in central Florida. My better half had a booming eBay business and I was playing cash games at a small card room here and sometimes Tampa

We invited my sister up from the keys for Easter, We were talking and I told her I was gonna buy a house to flip because honestly it was getting boring just playing cards and the games are smaller then I wanted to play,Would rather play a couple days a week max.

My sister immediately said I want in when I said I was gonna flip a house,I never wanted a partner really but didn’t have a problem with my sister making some money off us fixing up places

So I few weeks later I found a house online that had been stuck by lightning, Caught fire and fire department did a lot of damage. 2/1 860 SF block home on .33 acre lot for 33,000.

So I called my sister and told her I am going to look at this house and if I like it gonna buy. I told her if she wants in she can pay for the house cash and I will fix it up and pay for all materials and labor costs.

So I went and looked at it and made a deal 27,000 cash. My sister paid 27k, I rebuilt what I could hired company’s for other stuff. Cost me right about 20,000 took about 8 weeks. Sold for 89,900 she took her 27k I took my 20k we spilt the rest

Now she got the best of the deal as I was there everyday running the job and she was in the keys but I didn’t care she is my sister and I was happy she made some money also. Then we want on to the next one, My sister never got involved with the rentals.

So maybe you can buy the place he can fix and buy material. Then split profit

Biggest thing I never wanted a rental if I couldn’t buy cash, When the rent comes in I don’t want to give it to the bank but I was able to buy places cheap then

My advice would be flip some houses, Then use the profit to buy rentals cash, No bank loan, no hard money loans , I invested every dollar I made flipping into buying rentals cash and always bought dumps so I could get them cheap and rebuild

[4BET]

BTW I guess to Druff point about the market not being great. I do agree market isn’t great but I see much less of a down turn then 2008.

I wouldn’t buy a flip here in Florida in this market but we are looking for places to rent not sell