This property can be purchased by one investor in a traditional ownership strategy: one owner, cash or mortgaged.
What is Co-Ownership
- Multiple owners to share the cost of purchase and maintenance
- Cash purchase to alleviate the cost of interest payments on a mortgage
- Operation manager handles the day-to-day activities to free up personal time spent on this property
- Less hassle -> more passive
- Long term hold
- Organized as an LLC
- Lower initial cash investment requirement
- “Out-sourced” main activities to a professional
- Higher cash flow
- No mortgage qualification or additional debt incurred
Who Should Consider?
- Novice individuals who have apprehensions about buying their first rental property out of state.
- Active investors who are concerned about having ample time to manage their investment.
- Investors who would prefer to avoid the burden of a mortgage or encounter difficulties in securing one.
- Investors who are already occupied with managing other properties and wish to steer clear of taking on additional real estate.
- Investors who would rather not handle property managers or tenants.
- Investors who prefer to diversify their portfolio across multiple properties or investments in various locations.
Basic Guidelines of Coownership Program
The most fitting description of this program is that you share ownership of this property. You have a vested interest in the investment just as you would be if you owned it entirely yourself, however you are sharing the costs with a small group of other like-minded individuals. Your mindset and approach should be similar to owning it individually, with the only distinction being that you have partners in this property. To ensure smooth ownership, there is an operation manager who operates on behalf of all the owners.
- It resembles direct ownership, yet involves delegating another professional to handle the property’s day-to-day aspects, aspiring for a more passive approach.
- The general goal is a long term buy and hold rental, preferably not less than 7 years, ideally more than 10 – but owners can always vote on it in the future.
- The purchase is made in cash; however, once owned, co-owners can decide whether they would like to rely on each other’s resources or not.
The Operation Manager
SDI has collaborated with a knowledgeable individual in real estate investment within the local area to manage all the ongoing matters concerning the rental property.
The use of OM eliminates the owner’s responsibility of overseeing the daily management and maintenance of the property, as well as making decisions related to it.
Although the OM is responsible for supervising and managing the daily operations, there are certain tasks that the OM is not authorized to handle or approve, and requires seeking majority owners’ approval:
- Sale the property
- Obtain a mortgage or refinance
- Approve an expense over $12,500
- Terminate or replace property management company
- Majority owners may elect to terminate the OM
About This Property
|# of doors||2||Per Door|
|Schools Rating (on scale of A-C)||C|
|My Offer||Per Door|
|Offer used for analysis||$180,000||$90,000|
|Suggested offer (low)||$180,000||$90,000|
|Suggested offer (high)||$185,000||$92,500|
|Market Value (after improvements)||$195,000|
|Other Fees At Closing (pts, . . . )||$0||7%|
|Original listing date||8/11/23|
|DOM (days on market – TODAY)||28|
|Down Payment (%)||CASH Purchase||100%|
|Property Tax Rate (Approx.)|
|Property Management Monthly (%)||7.0%|
|Property Management Monthly ($)||$196||$2,352|
|HOA or Fixed Costs||$0||$0|
|Total Fixed Expenses||$933||$11,192|
|Total Expenses (Fixed + Mortgage)||$933||$11,193|
Financial Analysis / Deal Attractiveness
|5 Years||10 Years|
|Net Cash Flow||$119,758||$260,771|
|Average Cash Flow/Year||$23,952||$26,077|
|Average Cash Flow/Month||$1,996||$2,173|
|Projected Property Value||$237,247||$288,648|
Co-Owner Costs / Program Costs
|# of owners||4.0|
|SDI service fee||6%|
|Annual cashflow bonus||10%|
|Ins claim bonus||10%|
Per Owner Analysis
|Per owner (ann.)||$5,509|
|Cash on Cash||9.15%|
|Estimated ann. Appreciation||4%|
|Total ROI (cash purchase)||13%|
This analysis spreadsheet is provided “As Is”. All the information is believed to be accurate (except for the small effects of some simplifying assumptions), but is not guaranteed, and depends on the values entered for the property. This analysis is intended for the purpose of illustrative projections. The information provided is not intended to replace or substitute for any legal, accounting, investment, real estate, tax, or other professional advice, consultation, or service. The author of this analysis spreadsheet is not responsible nor liable for any damages arising from the use of the tool.
- Updated On:
- November 7, 2023
- 7 Bedrooms
- 3 Bathrooms
- 2,680.00 ft2
- Year Built: 1994
- Principal and Interest
- Property Tax
- HOA fee