Hi all
I have read all of Steve 'a books but have never had the finances to start buying properties. I am still not in the position to purchase but I have an opportunity that is too good to pass up. It is that good that I have to find a way to make it happen.
I work for a non profit organisation as a carer. We can never find suitable rental properties as the houses do get treated harshly by the clients. The clients are youth who are wards of the state and have been in and out of Juvenile Detention Centres. Each house we rent is a 6 bedroom and the company has to pay overs to secure the property.
Now I know in our town a 5 bed house is between $400 and $550K. Each house needs to be 5 bed and an office and buying a 5 bed and converting an office is suitable.
The company pays $800 per week for its current rental property.
My plan is to find an investor who would put in the deposit of $100K and we then purchase a property worth $500K. The guranteed rental is $41600 per year. The interest on $400,000 at 5% is $20,000. With rates and insurance to be paid this is still a substantial return.
My question is where do I find or advertise to find a suitable investor. When I was running the idea and numbers through my mind the name that came up for me was Steve McKnight. So this forum is my first stop.
Thanks for reading.
Hi Bellamia
Couple of quick points i would make if i was being asked to invest:
1) Your lender will want first mortgage so will they a consent to a second mortgage?
2) What rate of interest would you be offering the potential investor given the risk exposure and security position?
3) How long would the loan be for and what would be the take out strategy ?
4) Does the Company provide Directors Guarantees to the landlord when it rents a property ?
5) Does the Company repair the properties back to their original state once the Tenancy expires ?
At least with a little more information i can be well armed to make a informed decision.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
I can answer all those questions for you no worries. May be best to email me or give me a call.
Email is [email protected] and phone is 0402892474
thank you
Brandon
Hi Brandon
Prefer you emailed the response here.
It would not be something i would invest in (as i never invest in JV's) but was raising some initial points to help you get it out there.
As you are probably aware advertising such is not permitted on the site so was trying to give you a little rope with hanging yourself.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Where do you find someone willing to invest? You read books that say you don't necessarily need the money just the good idea. Well these companies are Australia wide and struggle finding suitable properties. I was thinking of a partnership where the partner supplies the finance and I provide the idea and contacts. Every property purchased will be positively geared 100% guaranteed. There are 6 organizations in my town alone all looking for suitable properties. They look after all maintenance and return the house to its original state at end of lease but they are happy to sign very long term leases. I believe I have a great opportunity now some advice on where to find interested investors would be great.
Thanks
As i mentioned why don't you post the answers to my questions and then a potential investor can stack it up against other opportunities.
At the moment there are deals coming out of the ground and the average investor cannot buy everything so needs to tick some basic boxes to see how far he takes his / her due diligence.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Questions answered below as best as I can.
1) Your lender will want first mortgage so will they a consent to a second mortgage?
Was thinking more of a partnership firstly where there was growth to purchase other properties for the same company or other similar companies. All companies find it hard to find properties as the houses are treated very harshly. But they all get repaired by company builder/maintenance man. In fact you will find they fix taps and appliances that normally a landlord would fix. The company I work for has these residential houses all over Australia. If houses were provided exclusively to them they would eventually only rent off you. This is definitely a niche market.
2) What rate of interest would you be offering the potential investor given the risk exposure and security position?
If the investor was not interested in partnership then a figure of 10% pa on money lent seems reasonable. But obviously negotiable.
3) How long would the loan be for and what would be the take out strategy ?
If it was a direct loan then a 10 yr period seems reasonable to pay back with 10% pa interest.
4) Does the Company provide Directors Guarantees to the landlord when it rents a property ?
The company provides gurantees and properties are fixed immediately if anything goes wrong.
5) Does the Company repair the properties back to their original state once the Tenancy expires ?
yes as per answer above.
At least with a little more information i can be well armed to make a informed decision.
– See more at: https://www.propertyinvesting.com/forums/help-needed/4349533#comment-296881
There is a few ways you could do this.
1. Borrow money from someone and you purchase (or your entity).
2. Joint purchase – you and them (or you own entities).
3. They purchase and you arrange things – a JV.
You need to be careful about needing a real estate licence for 3.
You find people who may be interested by talking – they have to hear about it to become interested.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Have to say I think you will be lucky to find an Investor happy to take the risk for 10% return given they could probably get 16-18% thru a specialist Mez Finance for similar risk albeit lesser time to have their money tied up.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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