I have $100K cash and am looking to use that money in real estate. I have looked into land and pre-construction, but am now thinking about becoming an investor partner. I see based on reading these boards that many people team up with an investor and then split the profits 50:50. Is this the normal set-up?
Are there any books or other information sources on this that could help me get started? My biggest worry is getting ripped off by someone. I also have questions on tax implications.
One last thing - I am not currently in the country (located in Germany for a couple of years). Would this be a major problem? I think I can empower friends and family with a power of attorney if they need to be there on my behalf (at closing, etc.)
Does the investor normally pay cash for the property or use their cash to take out a loan? Sorry for all the questions, but I’m thinking this could be a good way to get into real estate investing for now.
If you draw up a legal contract between you and the one you are investing with you should be fine. You can give power of attorney to your realtor as far as the closings go. As far as how to invest, most people keep the money in the bank to show cash flow and use loans to pay for the investments. Are you looking to buy and hold or fix and flip?
I don’t know much myself on the tax side of things so I can’t help you there. Please feel free to ask any questions and I will answer the ones I know.
I believe you can set up an LLC for you and who ever you partner with. Your accountant will file that partnership on a K1 return and any profits or losses that you have flows thru to your personal taxes 50 / 50 so it keeps your taxes seperate from your partners.
I am not an accountant but I have done this on one property and it worked out fine. We are now looking for the next property and the LLC will remain the same.
Good Luck.
We are always looking for investor partners. Many times we have so many projects coming in we have to pass on them becaues our cash is tied up. If interested goto our website and view the properties we have available. We sign a joint venture agreement that spells out the exact participation and terms.