- Joined
- Aug 31, 2007
- Messages
- 950
Hi Glen;
REIN, through Russell, has assembled a terrific JV package. It may seem pricey to you for you to buy. But, trust me; it will be one of the best investments you will make for your future.
There are so many variables in doing JV`s, it is almost impossible to give you a Cole`s Notes version here. Is the project financiallly viable? What is its price range? What is your level of expertise? How much is the "cash partner" putting up? How long before you exercise the exit stategy? Who is guaranteeing the loan? In whose name will the property be held? What do you expect your JV partner`s ROI will be? What will your carried interest be? (Carried interest is the portion of ownership that you retain without putting up any $$$.)
When I am analyzing a property, I TRY to earn at least 20% annual ROI for my partners. I can play with the all the variables in order to give that to the partners. Having said that, I am more interested in multi-family homes than SF, therefore, my CI can be as low as 5%. My formulas may not necessarily work for your circumstances.
If the final sale price is above $xxx.xx, allow yourself to collect a bonus that is greater than your carried interest ratio. For example, if I have a 5 or 10% CI, I may collect 50% of cash proceeds above a given set figure.
Each project must be examined on its own merit, and therefore, there is no ONE answer to your question.
Glen, I have always said the following:
When you own a SF home, the entire cost is yours.
When you live in a duplex, the second side subsidizes your mortgage payments.
When you own a triplex, you housing cost will be just about break even.
You begin to put money in your pocket when your property is 4 or more units.
My very first purchase, 35 years ago, was a six suiter that I did not live in. My second buy, but first "personal" purchase was three units, in which I lived in the middle unit.
If you can find a JV partner who will put up the cash and guarantee for you to buy that duplex, with your living in one unit, that is a perfect way to get restarted in this game.
If you feel I can offer more, feel free to PM me.
Good luck,
Dan
REIN, through Russell, has assembled a terrific JV package. It may seem pricey to you for you to buy. But, trust me; it will be one of the best investments you will make for your future.
There are so many variables in doing JV`s, it is almost impossible to give you a Cole`s Notes version here. Is the project financiallly viable? What is its price range? What is your level of expertise? How much is the "cash partner" putting up? How long before you exercise the exit stategy? Who is guaranteeing the loan? In whose name will the property be held? What do you expect your JV partner`s ROI will be? What will your carried interest be? (Carried interest is the portion of ownership that you retain without putting up any $$$.)
When I am analyzing a property, I TRY to earn at least 20% annual ROI for my partners. I can play with the all the variables in order to give that to the partners. Having said that, I am more interested in multi-family homes than SF, therefore, my CI can be as low as 5%. My formulas may not necessarily work for your circumstances.
If the final sale price is above $xxx.xx, allow yourself to collect a bonus that is greater than your carried interest ratio. For example, if I have a 5 or 10% CI, I may collect 50% of cash proceeds above a given set figure.
Each project must be examined on its own merit, and therefore, there is no ONE answer to your question.
Glen, I have always said the following:
When you own a SF home, the entire cost is yours.
When you live in a duplex, the second side subsidizes your mortgage payments.
When you own a triplex, you housing cost will be just about break even.
You begin to put money in your pocket when your property is 4 or more units.
My very first purchase, 35 years ago, was a six suiter that I did not live in. My second buy, but first "personal" purchase was three units, in which I lived in the middle unit.
If you can find a JV partner who will put up the cash and guarantee for you to buy that duplex, with your living in one unit, that is a perfect way to get restarted in this game.
If you feel I can offer more, feel free to PM me.
Good luck,
Dan