JV`s and small partners

[mattrussell]

Greetings,

I was curious about JV`s and the minimum amount of money needed to become involved. I`m fairly young (22) thus do not have a lot of capital to invest (<5k) but I recognize the value of starting young and importance of experience. Can anyone shed some insight on this topic? What kind of ventures exist that would entertain a small amount of money like this?

Kind Regards,

Matt

 

[GaryMcGowan]

Hi Matt,

Great question! I&#8217;ve seen some Real Estate Investments that you can enter into that start at about 5k. The smallest we had was 10K. You also have to ask yourself "what can I bring to the table?" Are you a contractor? Accountant? book keeper? property maintenance worker? If you bring something valuable to the table other than capital, that may also go a long way.

gm

 

[markbrad]

Another option for you may be the fact that you could get into a property for 5% down if you are willing to live there. This could be attractive for someone else who has the expertise etc, but not enough capital for a full downpayment. Maybe look at something with a couple of suites to do this. Just a thought.

Mark

 

[mattrussell]

I appreciate your feedback.

That idea does sound appealing to me, and it also ties in with my previous post regarding student housing. Correct me if I`m wrong, but I would acquire a property with a partner and we would enter an agreement whereby I live in the property for a pre-determined period of time (specifically 4 years because this is the duration of my degree) and at the end of the four years, the property would be sold or otherwise appraised and I would get whatever percentage was initially agreed on (assuming the property appreciated)? - I`m sure that sounds like an awfully straightforward and narrow interpretation, but is that basically how it would work?

Kind Regards,

Matt

 

[Thomas Beyer]

QUOTE (mattrussell @ Mar 30 2009, 05:18 PM) ... (<5k) ...What kind of ventures exist that would entertain a small amount of money like this?
What else can you bring to the table ? Are you a handy man ? Are you an accountant ? Are you a person with lots of time on your hand to find deals for someone else and take a cut ?

With $5000: buy a small house in a promising area of town in a promising city .. then rent it out .. or better: live there yourself and sub-let .. fix it up .. sell it tax-free .. repeat with a slightly larger house .. live there yourself and sub-let .. fix it up .. sell it tax-free .. repeat with a slightly larger house .. live there yourself and sub-let .. fix it up .. sell it tax-free .. repeat with a slightly larger house .. live there yourself and sub-let .. fix it up .. sell it tax-free .. repeat with a slightly larger house .. live there yourself and sub-let .. fix it up .. sell it tax-free .. etc. etc. etc ...


or: work hard and smart until you have 20-30K ..

related posts:

5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html

How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

 

[DaveToynbee]

Hey Mark,

I`m not sure if this was what Brad was refering to, but you just explained the jist of what we call in REIN, the " Hassle free tenant strategy". The basic deal (could vary):
An investor would put up the 5% down + closing costs
You would get approved for the mortgage at 5% down
You live in the property and pay all the propery expenses for the agreed upon term
At end of term, You and investor split the profits according to your shares.

Where are you going to school? Would you be approved for a 5% down owner occ`d mortgage in a suitable property there?

Dave

 

[mattrussell]

Greetings,

The school is in Seneca Falls, right on the Finger Lakes region of upper New York State. It`s a beautiful area and there is a lot of recreation and recreational properties because of the lakes. It`s close to Syracuse, Rochester and Ithaca, and ~3.5 hours to Toronto. As far as economic fundamentals (or all the things talked about in Dons book), I am reluctant to think there will be any serious growth in the next four years (I could be wrong though - it might just be the Tiger Woods years down there). I`ve done some comparables of recent sales in the past 6 months and their previous selling prices and some people have done pretty good, 20%/year in one example. Prices on the water are ~200-280k range, and prices in the lower end area are ~60-90k range.

So for me, just starting out, I`m not pretending to know a lot about real estate or what to do, that`s why I was hoping to get involved with someone who does

But I was thinking I would acquire a property for a great deal, live in it for fours years, fix it up as best I can, then sell it. Can things be that easy? Has a JV like that ever happened in the past with a student with virtually no money?


Matt

 

[Thomas Beyer]

QUOTE (mattrussell @ Mar 31 2009, 07:11 AM) ... But I was thinking I would acquire a property for a great deal, live in it for fours years, fix it up as best I can, then sell it. Can things be that easy? Has a JV like that ever happened in the past with a student with virtually no money?
yes it can be done ..

it is always easy after all the hard work is done, like: researching an area, writing the right offer, negotiating hard, finding the right JV partner, getting approved for a 95% mortgage, finding the right tenant, selling at the right moment ..

 

[mattrussell]

Thomas,

What steps do you think I should take then to better educate myself? I`ve done all the readings, articles, etc. What I lack is real-life experience. How would I go about getting in contact with potential JV`s?


Matt

 

[housingrental]

Hi Matt
FWIW - You don`t know the area, have no expertise, have possibly 5% to put down, and need to sell in 4 years - Dedicate your time to learning, saving money, and preparing yourself for a high income to allow you to purchase more in the future.

 

[Thomas Beyer]

QUOTE (mattrussell @ Mar 31 2009, 08:20 AM) Thomas,

What steps do you think I should take then to better educate myself? I`ve done all the readings, articles, etc. What I lack is real-life experience. How would I go about getting in contact with potential JV`s?

What books have you read ? What courses have you taken ?

did you join REIN ?

do you qualify for a mortgage ?

have you done extensive research in an area ?

do you have people that know you well with money (parents ? brother ? sister-in-law ? aunt ? grannie ? golf buddy ?) .. usually you start there ..

once you have done a deal, or better 3, then you can approach strangers .. (of course you can always approach strangers if you`re a great sales person .. but the answer will be 99 out 100: why now .. or no .. but maybe the one says `YES")

You could also approach sellers of homes and state "Hey, you get a new mortgage for 90% loan-to-value, I rent it from you for $1500/month and sub-let 2-3 rooms @ $500/month .. and in 5 years I`ll buy it from you for XXX $s or we do 50/50 in 3 years) .. you do that 25 times .. someone will say "let`s talk" .. but many times they will slam the door in your face .. but if you`re tenacious it will bear fruit ! Making money in real estate with no money invested is possible .. but hard foot work and great persuasion is required ! 10% inspiration .. 90% perspiration !!

 

[mattrussell]

Thomas,

Let me give you my ideal situation, as I see it, and you can tell me what is wrong with it. I purchase a house for under market value with 5% down and I get approved for a mortgage no problem. Once that`s done, I live in the house alone, and during this time I make smart investments into the property. At the end of my degree, I put the house up for sale, sell it for 50% tax-free profit and walk away smiling. OK there`s the dream picture, now please bring me back to reality.

I will say though, I`ve read Don`s books, subsciribe to RE investing in canada, and have read the generic wealthy barber type books. I have a genuine interest in this and I will make it work somehow, I figure I have to start somewhere...


What would you do?


Matt

 

[invst4profit]

Your plan would work if you are extremely handy with tools and you could buy at 30% plus repair cost below ARV.
You would also of course need the finances to hire any necessary contractors and buy all the required material.

It would have to be a home driven down in value due to it`s condition keeping in mind normal upgrades and cosmetic improvements on a "normal" home seldom return your full investment.

You are getting into a area where considerable expertise is required. It is possible although with a high risk factor in my opinion.
The TV home flip/reno shows were some what misleading and do not apply to a real estate market that is flat or declining.

 

[Thomas Beyer]

QUOTE (mattrussell @ Mar 31 2009, 02:13 PM) Thomas,

Let me give you my ideal situation, as I see it, and you can tell me what is wrong with it. I purchase a house for under market value with 5% down and I get approved for a mortgage no problem. Once that`s done, I live in the house alone, and during this time I make smart investments into the property. At the end of my degree, I put the house up for sale, sell it for 50% tax-free profit and walk away smiling. OK there`s the dream picture, now please bring me back to reality.

I will say though, I`ve read Don`s books, subsciribe to RE investing in canada, and have read the generic wealthy barber type books. I have a genuine interest in this and I will make it work somehow, I figure I have to start somewhere...


What would you do?


Matt
sounds great .. do it .. what`s holding you back ?

1) money to buy ?
2) money to hold / service the montly debt + taxes + upkeep + utilities ?
3) access to mortgage ?
4) skills to discern an average deal from a good deal from a great deal from a lousy / overpriced deal ?
5) time ?
6) willingness / guts to write offer ?
7) guts to WAIVE conditions ?
8) skills to write offer ?

 

[mattrussell]

Thomas,

I`ve got to admit, your posts do bring me to a chuckle. Indeed I do have `None of the Above." So basically what I`m taking away from your input is that I should wait until I`m a little more financially secure, better educated and have a more long-term goal in mind...? When that time comes, what will be the best course of action in your opinion?



Matt

 

[Thomas Beyer]

QUOTE (mattrussell @ Mar 31 2009, 04:33 PM) Thomas,

I`ve got to admit, your posts do bring me to a chuckle. Indeed I do have `None of the Above." So basically what I`m taking away from your input is that I should wait until I`m a little more financially secure, better educated and have a more long-term goal in mind...? When that time comes, what will be the best course of action in your opinion?
re-read this posts` answers and links ..