Newbie Needs Advice In Louisville
Hi All !
My best friend and I have been looking into RE for some time now. Her dad is actually a builder/contractor/RE investor. He has shared knowledge with us, but doesn't really have time to "hold our hands". She will be coming into a six figure inheritance this week and wants to use it to to some rehabs together. My question is how would we go about doing this as partners? Should we have an LLC as her father does? How would this work? She will be the finance dept. of our operation and my fiance and I will be doing the rehabbing(he is a handyman/carpenter plus has extensive knowledge of plumbing and electical). Any advice would be greatly appreciated.
Thanks in Advance
We do not recommend partnership. Create two distinct companies. If your friend mismanages the funding, your reputation, friendship, future marriage, and credit may be at risk. Instead, control your own destiny and work separately yet distinct with one another on the deals. Develop a strategy above the financing benchmark and determine how to leverage other peoples money (OPM) without burning through your established chunk. Secondly, become creative with seller financing, subject to, or pre-foreclosure opportunities.
The was a short list, but you should be as creative as possible, start with small chunks then move to the larger deals. Study from a real estate guru and feel comfortable and confident before making big mistakes. Lastly, have fun because attitude is EVERYTHING!
Eric & Rosa
[addsig]
Laney,
Good luck in Louisville, I can't wait to get back there and give you a little competition. Haha. I am working with a partner right now and so far so good, however, keep it separate. Try to keep it as fair as possible and if one of you burns the other figure out how to deal with it but going into an LLC together wouldn't be the best idea. I disagree with a lot of people on this site about using OPM. If I had my own money I would definitly avoid the paperwork hassle and use my own. You also get to keep all the profit and you are not as worried about holding cost and interest rates, not to mention if you use a hard money lender you will be looking at outragous points (on average). Best of luck to you hope I helped some.
Jim