Hey Guys I'm here looking for some advice.
As you may know, my primary income right now is in commercial real estate. I also own a 4-plex and have another duplex under contract. In my JOB I work in commercial property management and Leasing for a local real estate developer. Now, his company is slowly starting to fall apart, and I dont see too bright of a future at this company.
Lately, I have been doing a lot of networking and reconnecting with real estate owners I met with back in my college days and have been looking at potential partnerships and job opportunities. After talking with an investor who've known for a few years now, he offered me an opportunity that I'd like some feedback on.
He is a big investor, im talking 200+ houses and 2k+ apartment units in the area. He has a few buildings (~60 units) that are 2-3 hours out of the city that have since been neglected and not properly managed. Their neglected because he is too busy with larger projects locally. He has tried to sell the buildings, but their isnt much interest at this point with the market and current vacancy. Currently he has a property manager that doesnt do anything. She doesnt even pick up the phone from a prospective tenant :bgh: Since this new manager started, vacancy is sitting at about 50% across the board. Now, I don't see it being to difficult to get it back up to 100%, but it would take a chunk of time to get everything all switched over and properly managed.
He has offered me the position of property manager/partner. If I take this offer, it will not pay anything, per se, but I will get 50% of net income and 50% of equity in excess of what he paid for the property. So, right now the buildings are still profitable at ~50% occupancy.
He says that it will be structured like a 50/50 partnership. i.e. if he paid 400k for the building my 50% will be worth 200k and his will be worth 200k. Then, he will essentially "loan" me the 200k of my equity at 5% interest. I can choose to pay the loan down with my 50% from NOI, or I can keep it myself and have just an interest only loan. We havent really talked about down payment yet, but he suggested maybe a 2% DP just so I have some skin in the game. I can probably get this down to no money down.
Now, the reason I made this post is to get your thoughts on what else I should look at before saying yes/no. What else is there that I'm missing that should be laid out before the deal is made. I believe the pros/cons to be:
Pros:
Learn from a highly respected owner with potential to do larger deals down the road.
potential to earn ~60k passively in real estate income every year with not much downside.
Equity in larger buildings.
Cons:
3 hour commute each way a few days a week.
Most likely would have to leave my current employer and wouldn't have much consistent income. (I have atleast 6 months expenses saved up)
Wouldn't be making much money for quite a while.
Thanks!
As you may know, my primary income right now is in commercial real estate. I also own a 4-plex and have another duplex under contract. In my JOB I work in commercial property management and Leasing for a local real estate developer. Now, his company is slowly starting to fall apart, and I dont see too bright of a future at this company.
Lately, I have been doing a lot of networking and reconnecting with real estate owners I met with back in my college days and have been looking at potential partnerships and job opportunities. After talking with an investor who've known for a few years now, he offered me an opportunity that I'd like some feedback on.
He is a big investor, im talking 200+ houses and 2k+ apartment units in the area. He has a few buildings (~60 units) that are 2-3 hours out of the city that have since been neglected and not properly managed. Their neglected because he is too busy with larger projects locally. He has tried to sell the buildings, but their isnt much interest at this point with the market and current vacancy. Currently he has a property manager that doesnt do anything. She doesnt even pick up the phone from a prospective tenant :bgh: Since this new manager started, vacancy is sitting at about 50% across the board. Now, I don't see it being to difficult to get it back up to 100%, but it would take a chunk of time to get everything all switched over and properly managed.
He has offered me the position of property manager/partner. If I take this offer, it will not pay anything, per se, but I will get 50% of net income and 50% of equity in excess of what he paid for the property. So, right now the buildings are still profitable at ~50% occupancy.
He says that it will be structured like a 50/50 partnership. i.e. if he paid 400k for the building my 50% will be worth 200k and his will be worth 200k. Then, he will essentially "loan" me the 200k of my equity at 5% interest. I can choose to pay the loan down with my 50% from NOI, or I can keep it myself and have just an interest only loan. We havent really talked about down payment yet, but he suggested maybe a 2% DP just so I have some skin in the game. I can probably get this down to no money down.
Now, the reason I made this post is to get your thoughts on what else I should look at before saying yes/no. What else is there that I'm missing that should be laid out before the deal is made. I believe the pros/cons to be:
Pros:
Learn from a highly respected owner with potential to do larger deals down the road.
potential to earn ~60k passively in real estate income every year with not much downside.
Equity in larger buildings.
Cons:
3 hour commute each way a few days a week.
Most likely would have to leave my current employer and wouldn't have much consistent income. (I have atleast 6 months expenses saved up)
Wouldn't be making much money for quite a while.
Thanks!
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