Posted by DaveD (WI) on October 29, 2003 at 15:21:27:
Frankly, if I were putting 35k down I’d want to be controlling much more than a 170k investment. That’s 20% down any way you cut it. The thing is, you’re not even controlling that much, it looks to me like a loan. Something like they split the profits, you fund the loan? IMHO, if you (they) are going to be taking over financing, best do it with little or nothing out of your pocket. If you are bound and determined to do this deal, why not have your partner assign it to you for a few thousand bucks?
Do you realize with a little effort, and the same 35k, you could be controlling 350-750k by yourself without any partners? The key is to tie up properties with very little out of your pocket instead of a lot.
Have the seller refinance, if he wants that much cash. You can do better than this. Any time you write a huge check you stand the chance of not sleeping well at night. Find a better way to put your home equity to work. Until then, guard it with your life.
Hi,
I had another beginning investor offer me to get in on a deal. He doesn’t have any money to fund. Also, I would come up with funds by taking out a home equity loan.
Subto deal:
Mortgage balance - 90k
Home is worth - 170k
Seller wants - 35k
I would be funding it, he would be putting the deal together. He also has a partner he works with.
He is offering %30/annum return on this. Would this be worth it for me to take out a home equity loan? Should I be getting a larger share?
Posted by Brent_IL on October 29, 2003 at 15:59:38:
Too much money for too little equity, and no way to get the cash back quickly.
?Beginning investor?? Beginning investor with a partner who won?t or can?t get a loan?
I wouldn?t accept the $170,000 without running good comps. What if it costs 30% of principle to get your money back? All I can envision is risk without a proportionate reward.