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I have come across a lot of people that seem to want to invest in rental
properties, but no one wants to do this on their own, they just dont want
the hassle.
In my area, properties seem to demand much more rent than the house is
valued at. (I have always believed to target your rent at about 1% of the
value of the house. I think we could easily get 1.5 to 2% on most of the
properties we are discussing), and I also think we could get many of these
properties at below market value, so that makes the idea much more
attractive.
There has been discussion of a group effort. I am wondering if anyone else
has tried this and want to get some input and opinions.
The basic summary of what we have come up with is this:
Everyone invest $x (per "share"). So if we set initial share price at say
$x, and 20 people want to buy 1 share, and 20 people want to buy two shares,
we immidiatly have $(x * 60) in the bank.
Here is where we are having discussions and where we are looking for input
from others on how they are working it.
1 - We establish an "order" to the group, and incorporate (ie, president,
vp, cfo, etc).
2 - We hire an active manager. This person would take care of day to day
issues, outsourcing where needed (plumber, lawncare etc). Based on the
number of properties, this may be a part time or full time position.
3 - In future may hire maintanance person.
4 - Any of the investors can help scope out properties and bring them to the
group.
5 - At the "end of the month" we take all rents paid, pay out appropriate
expenses (above mentioned manager, any needed maintenance, any corporate
expenses, etc). With whats left, we divide that down (discussing
percentages) and part of it goes out as a "dividend" to the "shareholders",
part of it goes to a "maintenance pool" for when we have a major unexpected
expence on one of the properties and the remaining goes into the bank for
future property purchases.
6 - Our goal would be not to finance any properties, but we may consider if
an attractive offer comes up and we need the money for the transaction.
Obviously this is an over simplification and we have discussed these issues
in much much more detail.
Looking for ideas, pitfalls, etc from anyone who has done this.
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has anyone tried an ownership group or coop?
