60 Second Insights

What is the Difference Between Debt and Equity Partners?

November 23, 2015 by Dave Lindahl Leave a Comment

Hey welcome to another edition of 60 second insights

This week’s question is what is the difference between equity partners and debt partners.

Debt partners are like lenders, they are going to loan you money and you are going to have an obligation to pay them back. They are not going to participate in the equity in the deal.

That’s a good thing because all you do is give them a return at 5, 6 or 7% or sometimes a little bit higher and when the deal is done, it’s done. The benefit of using a debt partner is the fact that you can actually re-finance them out of the deal.

Equity partners, will give you money and you have no obligation to pay them back. But if you’re smart and you are good investor, you will be owners of the property. They are going to participate in the cash-flow, they are doing to participate in the upside of the property, that is why they want to be equity partners, it is a good deal they want to participate in the upside.

The bad news for you as a sponsor is when you want to re-finance the property or pull a bunch of money out because you can’t manage it properly, you pay out the equity partners and they are still owners in the deal.

So equity partners are easy to raise money from because everybody wants to take part in the upside but debt partners you can re-finance right out of the deal. That’s the difference. Hey if you have more questions put that in comments below and I might answer that next week.

Should I allow pets?

November 23, 2015 by Dave Lindahl Leave a Comment

Now this week’s question is, “Dave, Should I take pets?”
When I first started investing I didn’t take pets because I didn’t want pets to destroy my units, I didn’t want to have the extra costs when a pet left the property you know the cat stink, the dog you know scratching all over the place and then I realized that 25% of all tenants have pets and I was excluding them from you know my renting share when I was looking out in gaining more rental for my properties. So when I started with the pet policy and you wanna have a pet policy that allows pets to come in you can charge extra for them 25-30$ you get a pet security deposit which is a 150-200$ and what you have done by doing it will only allow one cat and/or one dog that dog can be more than 20 pounds. You do that and you’ve just increased your market share every time you look in for a new tenant into your property. That’s what we do with pets. Hey you got a question? Put it on the blog section below. I might just answer that next week.

60 Second Insights – How do I verify the income of the property?

November 23, 2015 by Dave Lindahl Leave a Comment

This week’s question comes from George and George asks, ”Dave, how do I verify the income of the property especially when I don’t trust the seller?”

Well, the first thing you do when you’re verifying the income is you match the rent roll with the actual leases and when you see they match up together then your rent roll should match what it says from the lease from money coming in and then you take a look at the income report. OK and see if the income report is matching the rent roll OK that matches the leases. And then you know here’s the thing owners can fudge that and they do it often, the dishonest ones. So what you should do is take the next step and get the bank statements so ok you give me the profit&loss statements, you give me the rent rolls and now give me the bank statements and backup the fact that this money’s actually come in and if you do that you will know that the income is actually the income.

You got a question? Put in the blog below. I might just answer next week.