What Do You Pay Someone To Use Their Credit?
I am searching for investors to partner with to get some quick cash to have on hand for the occassional expenses on 3 rentals I own. I approached one person who said that If I had excellent credit, which I do, he can allow me to purchase homes using my credit, that both our names will be on the title for the homes, I will get the tax write-off, and in 12 months he will purchase the property outright from me. What I get out of the deal is the tax write-off for that year and $2,000.
Since I only started in this business March of this year, and don't know of all the RE strategies, and what Investors pay for certain services, I will like to ask anyone to please let me know if this is something I should consider, and is that sufficient payment for doing this. Any information will be greatly appreciated.
Latestarter,
think before you act!! You said that you needed cashflow to assist you with the occasional expense needs of 3 rentals that YOU OWN.
If you own 3 rentals does that mean you are in a negative cashflow situation for all 3? If you are then you need to think about raising the rent to ensure that the property is supplying you with the cash you need for maintenace. Why would you borrow (obtain a partner) for "maintenance money" for 3 properties? That does not make any sense to me.
Are the 3 rentals in the same building? If they are, why not obtain a low interest equity loan so that you can fund whatever you need to do? You said that your credit is good - then use it.
It could be that I misunderstood your question altogether. Are you saying that you need a partner with cash to assist with the repairs of your 3 rentals AND to help you with the purchase of additional properties? If that is the case, then why don't you find an attractive deal and obtain a partner and suggest a more equitable proposal. Do you need the tax write off?
It seems that the proposal you outlined is a little off balance for someone that only has 3 rentals. It seems to be that you need more cash. Then why not set up an arrangement that provides that.
More importantly, it seems that you are not clear about your own rei preferences and objectives. Spend some time thinking about what you need out of a deal then you can bring a partner on board that assists you with your objectives. You do need to be clear about what you are trying to do, what type of properties you like, your farming area, property prices in your neighborhood, etc.
Once this stuff is thought out, then you will worry less about whether or not you will be taken. Hope this helps.
Hello latestarter,
I tell you, RED FLAGS go up on any deal like the one you pose. There is something wrong with the picture that you are painting. I would not walk away from this deal, I would run as fast as I could.
Ligem,
I think you misunderstood my question. Since I have mortgages on these three properties, and don't have a lot of cash , I am trying to partner with people on deals that will allow me to get some cash to build up a good reserve for anticipated expenses, and to purchase additional properties at some later date. Right now, my goal is not to buy and hold, but to get into some quick cash deals. Cash flow on two properties are minimal, and the rent is as high as it could be for that area. The third one I purchased recently, it needed some rehab work, and I am currently trying to rent it, so I am a little cash poor right now. They are all single family homes.
I am doing RE part time and don't have the hours to put into finding many deals.
Thanks for your input
latestarter-
The deal you posed about using your credit with the other investor sounds very suspicious indeed. At our local REIA we had someone talk about mortgage fraud, and some of the deals she described sound alot like what you've mentioned.
Please be careful!
Check out this link!
http://newsobserver.com/news/story/2725905p-2527278c.html
Thank you all for your comments. You have confirmed my suspicions. If you don't have the time to find the properties, what good (legal)partnership deals are available to new investors to earn some cash?