Bringing in investors - Posted by Chris

Posted by colvegas on March 23, 2006 at 01:19:02:

Well not sure what specifically you are trying to do.
I work with land trusts and can structure in such as way to ensure all parties are protected in the transaction.
If I can help feel feel to get with me at 702-400-7632.

Bringing in investors - Posted by Chris

Posted by Chris on March 21, 2006 at 21:16:45:

I am working on my second deal. two people i know are lined up and anxious to invest. This is a very good thing of course but i dont know how to structure it. Should i treat it like a mortgage where they loan me the money at a high interest rate and i pay them off within a few years. Its looks like i’m going 5% down on my next deal so that price plus closing costs i want my investors to cover and i will pay back with interest over the next three years or so. then i will have the profits all for my self without paying a penny up front. my mind is really trying to get creative. can anyone point me in the right direction on how to structure an agreement with an investor? interest, length etc… Past experiences?

P.S. my goal is to acquire my first 5-10 properties in this fashion, i want to become an expert at hooking up my investors with awesome returns with me owning the property taking all the cashflow in the tail end once they are paid off.

Re: Bringing in investors - Posted by John Corey

Posted by John Corey on March 23, 2006 at 07:51:15:

You can keep the deal simple if the investors act as a lender and the deal shows them as the 1st lien holder (mortgage or trust deed depending on the state).

5% cash from you and 95% from them is a high LTV loan. If they have to take the place back they likely will have a loss as 5% is easy to wipe out.

What sort of interest rates are you thinking of offering them? If it is high then you do not want to keep the long longer than you have to. Otherwise it will be wasting the cash flow for no obvious reason.

Why do you want to use private finance when conventional is likely to be at better rates? There are some good reasons. You have mentioned none in the original message.

BTW - If you are paying above normal rates for long periods of time you might be paying out more than if you had conventional rates with up front fees. You have to do the math. If you find you are paying more you are transferring some of your profits to the investors compared to other structures. Definitely not keeping all the profit.

John Corey