Financing DG Members Deals

I think that is interesting I am sure everyone on this site wants to see everybody succeed so is a great point. I will love to know that when I find a deal I could look to someone in the DG family to help with financing!!

Well Stated

pauljacobi

That was a forum topic I started called WHY NOT START A DG FAMILY PML FUND.

Jim Kendrick

While we didn't have an investment fund (LLC) from DGers, we did run an investment fund for a number of years (I think 7 to be precise), but it got to be such a major time consumer. We had investors buy units at $2500 each and then we went out and bought property with the aggregate funds. The problems, in our approach, was the following: 1) Costs in time were high because of all the necessary reporting tha needs to be completed....SEC forms, year end IRS forms, state(s) reporting, etc. 2) We ran the pool of funds as a democracy; you got one vote for each unit you owned, with ourselves owning units in the company and also getting votes as the managing member.....quite honestly, you can't run a fund when you accept money from knuckleheads. Just that simple. Money does not equal brains. Remember that. 3)We ended up spoiling our investors. In the early years, they received cash on cash returns of about 40% for a couple of years. When the RE market declined, we had a couple of bad years(2007 - 6%, 2008 - 0%, 2009 -3%) becuase we had legacy costs in our properties we couldn't get out of without sacraficing clients. We had to wait and mix profitable sales with losers to equalize our portfolio sales. But when you produce 40% returns, clients can't appreciate all of the sacrifices and hard work we did for a 0% return. 4) Everyone thinks they are an investor and they know best. Articles in magazines, newspapers and infomercials (sorry, Dean) make everybody think they have the savvy to be a real estate investor. But successful real estate investing is hard work. A good foundation in RE education helps. So does a little luck. Quite honestly, money is important but not as important as most people on this forum believe. For this reason, we just got tired of some of the investors second guessing our transactions. Sometimes we were wrong, but 90% of the time we were spot on. 5)Lastly, it was just time to move on and liquidate the remaining real estate pool to get a clean slate to do it over again with an entirely different focus. Our plans are not to revisit our mistakes above. Time will tell. It will be a sucessful 2011.

The reason I have not partnered with anyone from this site (yet) is the deals I have been presented were a TOTAL joke!! You must first know how to supply a real deal before it is funded. If I am working with someone out of state I rely on them to know what they are doing and supply the exit strategy! Huh? Oops?
I have not seen an accurate ARV based on listed and sold comps yet! I have seen zillow says this or my agent says this or the OWNER says it worth this. PLEASE!!

I try to help these people and I won't take advantage of them either!

Michael Mangham
MD Home Acquisitions LLC