120 Haviland St

Exit strategy 

Purchase and list for sale, with minor repairs. 

We purchase the property off market, we believe that the purchase price is below market value. Therefore our plan is to close and list it for sale right away. The property is currently under contract, closing on the 25th of September. 

The property is in good condition (HVAC, water heater, electrical, plumbing, roof - all replaced since 2010). 

• Alternative exit strategy - Since the property is already cash flowing,  we are in no rush to sell and can wait for the right price. In case there are no buyers this property is a good cash flowing rental. 
  

Numbers

1. Investment term: 1 year or less

2. Purchase price: $160,000

3. Appraised value: $236,000

4. Current rent: $3450 (Owner covers expenses)

5. Investor contribution: 90%

6. MGT contribution: 10%

7. Profit Investor: 50%

8. Profit MGT: 50%

9. Investor preferred ROI: 10%

10. Projected Investor IRR: 15-30%

    
    

Legal partnership structure

There are many different ways to legally structure a partnership, some structures better fit certain situations than others. 

2 common structures are New LLC and Joint Venture.  

New LLC: 

More common in longer term, bigger projects. The investors are listed as LP (Limited Partners) in the operating agreement. 

Advantages: 

• The new LLC purchases the property.

• Investors are direct owners 

Disadvantages: 

• Slower and more expensive process

• Might trigger higher tax withholdings at the time of sale.

  
  

Joint Venture: 

More common in short term, smaller projects. The investors sign a joint venture agreement with the company that states both sides rights and obligations.  

Advantages: 

• Quicker and less expensive process. 

• No tax withholding at time of sale. 

Disadvantages: 

• Investors are not direct owners to the property. Their investment is secured by their contract with the developer.