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Originally Posted by Lindy
If this is true, I can't understand your willingness to pay 50% of your profit to an investor, but you are reluctant to pay a few months of interest. The figures don't back up that choice.
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Well, it isn't just the interest. Being able to pay cash for a property - especially the types of properties I am looking for, will allow me to have not only substantially more negotiating leverage, but also the ability to finance properties outright that would be a pain in the ass, if not impossible, to finance.
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Originally Posted by Lindy
Why not sell the property, and put the proceeds with the "somewhere between $35,000 - -$50,000" that you have (you do have that in cash, right?) and be your own investor? Or is that you want to start with a more expensive property?
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There are a couple of reasons I don't want to sell the property quite yet. First and foremost, if I keep the property another 11 months or so, I won't be required to pay captial gains on the income. Secondly, I believe there is a relatively decent chance (probably 50-50) that the property value will increase rapidly in the near future. A few changes will be happening in the area and it should bring the prices up, and if a new zoning vote passes, a contactor may want to purchase several of the homes in the area to demolish and put up for industry. Per the proposal that is currently in the courts, he may be required to pay 1.5x market value for the homes.
The funds aren't in cash, but are fairly liquid - they are in stocks and money market accounts. It would probably only take a few days to get it in cash.
Also, most of the properties I have been looking at are more expensive than I can afford to pay in cash, even if I sold the house, so I'd still be in the same boat, but with less cashflow and more cash sitting in the bank.
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Originally Posted by Lindy
It comes across that you are seeking an investor because, although you have confidence, you are not willing to "bet the farm" in terms of your own money, on the success of your scheme. On the other hand, if you do it and it works, then you have a track record (albeit short.) That will make the next potential deal more attractive to an investor.
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Kinda, yeah. I would prefer not to put all of my savings/equity on the line. Also, I'd rather share the risk than take all myself. I'm only 22, and I'd feel more comfortable putting a portion of my assets at risk rather than "betting the farm" as you say. Although I have confidence in my abilities, I'm not the type of person to go all in this early in the game, when I have so much to lose...
Thanks guys - keep it coming
