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What happens if you get back $280k in 5 months? How’s your brother in laws record?
VP 1 below answers your question as to why he needs my money
Doing business with family is tricky, I always avoid it as a personal rule. In your case, if you still want to go forward, I would get the agreement on paper.
Mentor
Talk with a lawyer that handles real estate transactions before you do this and then make sure you structure the deal properly using your own lawyer. Do not do this without independent legal counsel.
Very unlikely to get those returns in today’s market. You may be stuck for a year at a minimum and expect lower returns
LA market is still pretty hot
Subject Expert
16% total return, which projects out to around 66% annual return.
That’s insanely high, which pretty much means that this is highly risky.
Is the $300k he’s asking for the total budget for repairs? Does that include any sort of contingency? Does your BIL have any sort of track record specifically in flips in this general area? If this deal goes south, would you have the means to recover financially?
As long as it’s on paper, go for it! If he’s an experienced flipper, it’s unlikely you lose on this deal. And if you do, it may be a marginal amount. Chance of losing 10k, higher chance of making 30-50k. Flippers need cash, banks don’t like to lend on multiple deals at once.
Is BIL also into this for 300K?
This SPM1 right here. Talking sense. But with the right papered over terms, and insurance on the property, it seems like a good option with limited liabilities.
Good luck in this market
Anything can happen in 3 months. I personally would not do it. My husband and I rehab and hold properties. I bought one of those flipped homes and never again. The deals are out there but very rare to see numbers work. A lot of flipped homes are sitting longer in the market. Is he guaranteeing that $50k profit?