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I have not had a partner or partners in years so I am new to this Having partners stresses me out since I have others who trust me. I really had a bad year in 2008, if not, the worst year in the real estate business. Fortunately, I am profitable globally but not out of the woods quite yet since I have accumulated alot of debt since the credit markets were shut down. I did learn alot which will benefit my next venture. What I had in mind was the following was having a small number of investors and have three key players to manage the investment portfolio. Lets take a hypothetical case:
WILLOW CREEK APARTMENTS 400 UNITS $10 MILLION PURCHASE PRICE
10 INVESTORS WITH $500,000.00 EACH = $5,000,000.00
3 MANAGERS/ GUARANTORS WITH $0= THE MANAGERS DOES NOT HAVE TO COME UP WITH THE CASH BUT NEED TO PLEDGE $1 MILLION OF COLLATERAL TOWARDS THE PARTNERSHIP APPROVED BY THE 10 INVESTORS. One of the managers should be an attorney/plublic relations person.
INVEST 20% ($,2,000,000.00) TOWARDS THE DOWN PAYMENT AND GET A 80% LOAN.
INVEST THE REMAINDER, $3,000,000.00 OR LESS TOWARDS CAPITAL IMPROVEMENTS.
GET AN END LOAN AFTER THE COMPLEX HAS BEEN STABILIZED. STABILIZED PROPERTIES IN THE GEOGRAPHICAL I AM CURRENTLY INVESTING GOES FOR $50K PER UNIT SO WILLOW CREEK APARTMENTS WOULD APPRAISE FOR $20 MILLION.
WE GET A PERMANENT LOAN FOR $14 MILLION, RETIRE THE $5 MILLION TO THE ORIGINAL INVESTOR AND OUR NEW PARTNERSHIP HAS $9 MILLION IN RESERVES FOR THE NEXT PROJECT. I FIGURE WE GET A 70% LTV LOAN VERSUS AN 80% SINCE OUR BUSINESS MISSION WILL BE CASH FLOW. OUR GOAL WOULD BE TO BE NET CASH FLOWING AFTER DEBT SERVICE AND EXPENSES OF $100.00 PER UNIT PER MONTH .
REFINANCES ARE TAX FREE SO WE CAN ALL REWARD OURSELVES.
I HAVE A PROPERTY MANAGEMENT FIRM THAT I HAVE AN IDIOT PROOF FORMULA ON HAVING THE LOWEST OVERHEAD IN MANAGEMENT. EVERYTHING IS INHOUSE, TO LEASING, CONSTRUCTION, LANDSCAPING, AND MAINTENANCE. THE ONLY THING THAT IS CONTRACTED IS SECURITY DUE TO THE LIABILITY.
Again, the above is just a basic outline of what I had in mind . Any input would be greatly appreciated. I DO NOT want to partner up with people I cannot get along. I am not doing this to make a living or because I need to . I think it would be a great idea of meeting new people with the same goals and interests and develop lifelong friends. By the way, the 3 managing partners will be the last to get paid.
WILLOW CREEK APARTMENTS 400 UNITS $10 MILLION PURCHASE PRICE
10 INVESTORS WITH $500,000.00 EACH = $5,000,000.00
3 MANAGERS/ GUARANTORS WITH $0= THE MANAGERS DOES NOT HAVE TO COME UP WITH THE CASH BUT NEED TO PLEDGE $1 MILLION OF COLLATERAL TOWARDS THE PARTNERSHIP APPROVED BY THE 10 INVESTORS. One of the managers should be an attorney/plublic relations person.
INVEST 20% ($,2,000,000.00) TOWARDS THE DOWN PAYMENT AND GET A 80% LOAN.
INVEST THE REMAINDER, $3,000,000.00 OR LESS TOWARDS CAPITAL IMPROVEMENTS.
GET AN END LOAN AFTER THE COMPLEX HAS BEEN STABILIZED. STABILIZED PROPERTIES IN THE GEOGRAPHICAL I AM CURRENTLY INVESTING GOES FOR $50K PER UNIT SO WILLOW CREEK APARTMENTS WOULD APPRAISE FOR $20 MILLION.
WE GET A PERMANENT LOAN FOR $14 MILLION, RETIRE THE $5 MILLION TO THE ORIGINAL INVESTOR AND OUR NEW PARTNERSHIP HAS $9 MILLION IN RESERVES FOR THE NEXT PROJECT. I FIGURE WE GET A 70% LTV LOAN VERSUS AN 80% SINCE OUR BUSINESS MISSION WILL BE CASH FLOW. OUR GOAL WOULD BE TO BE NET CASH FLOWING AFTER DEBT SERVICE AND EXPENSES OF $100.00 PER UNIT PER MONTH .
REFINANCES ARE TAX FREE SO WE CAN ALL REWARD OURSELVES.
I HAVE A PROPERTY MANAGEMENT FIRM THAT I HAVE AN IDIOT PROOF FORMULA ON HAVING THE LOWEST OVERHEAD IN MANAGEMENT. EVERYTHING IS INHOUSE, TO LEASING, CONSTRUCTION, LANDSCAPING, AND MAINTENANCE. THE ONLY THING THAT IS CONTRACTED IS SECURITY DUE TO THE LIABILITY.
Again, the above is just a basic outline of what I had in mind . Any input would be greatly appreciated. I DO NOT want to partner up with people I cannot get along. I am not doing this to make a living or because I need to . I think it would be a great idea of meeting new people with the same goals and interests and develop lifelong friends. By the way, the 3 managing partners will be the last to get paid.
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