Jem/UV dilemma... (To sell or not to sell) - Jemsite
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post #1 of 24 (permalink) Old 05-17-2002, 07:39 PM Thread Starter
rvj
 
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Jem/UV dilemma... (To sell or not to sell)

Well guys, I've got this major investment dilemma. I'm a Real Estate agent that has a chance to make a big financial score. The situation is I have an opportunity to buy a four story building in a hot area of Chicago. I would be a 50% partner with a co-worker. The problem is that we don't have enough money to swing it. The building will go for about $600k and need approximately $300k for improvements. Once completed, we'll sell the top three floors as condos for $1.4 million. Plus, we still retain ownership of the main retail space, which is currently rented for $3k a month. We need about $65k for a down payment, and have $52,000 between the two of us. Therefore we're only $13k shy, or $6500 each.

Now the dilemma.... I'm thinking of selling my UVMC, DNA, and 777DY.
I don't mind losing the UV and the DY, but the DNA is out of the question. Unfortunately the DNA is worth the most money and will most likely have to go along with the others.

As you can see, there is no way that I can pass on this opportunity. We can net about $250k each. This will go a long way in ensuring that my twins get a proper college education.

So, if you guys were in my shoes, what would you do? Any advice or opinions are greatly appreciated. Thanks!!! --rvj
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post #2 of 24 (permalink) Old 05-17-2002, 07:59 PM
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Pull in a third minority investor with $20-25k, don't break your own banks as there's always the unexpected emergency around the corner which could create some major problems if you're tapped!
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post #3 of 24 (permalink) Old 05-17-2002, 08:03 PM
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what rich said. maybe get more upfront $$$ from a silent partner. you''ll be cutting it too close and can risk everything. sell the axes too if they're frivilous and an un-necessary luxury that impedes day to day living

20% of something is better than 50% of NOTHING.

don't take risks such as this, even sure things. especially when you're dealing with contractors, laborers, permits and things beyond your control.

good luck... glen
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post #4 of 24 (permalink) Old 05-18-2002, 05:53 PM Thread Starter
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The possibility of a third investor has been discussed. It seems that my partner is a little greedy and does'nt want to share the wealth. In fact, a portion of his money will be borrowed from relatives. I always keep a reserve in the bank due to the fluctuating income of Real Estate. Therefore I won't be tapped, but my partner will be. The reason why I'm considering selling the axes is so I don't touch my reserve.
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post #5 of 24 (permalink) Old 05-18-2002, 05:59 PM
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If he's tapped then the burden will fall completely to you in any unforseen situations (which there will be plenty) concerning this deal. I'd proceed very carefully.
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post #6 of 24 (permalink) Old 05-18-2002, 07:00 PM
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again Rich beat me to the punch with the reality check.

i would RUN fast and far away from this "get rich quick opportunity".

in a PARTNERSHIP, YOU assume every burden and problem that your partner brings. if he cannot make his share of payments, then you must for him, or you both down together with the sinking ship.

you need to consult with some financial advisors and people with common sense before moving further. Please do some re-thinking and a re-evaluation on your partner as well
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post #7 of 24 (permalink) Old 05-18-2002, 07:42 PM
 
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hi:

I think you have to be aware of all the other things that are not related to your guitars.
Lets face it. Our guitars is very important to us, is our divine vice, but it aint nothing compared to our family or health.
I think that the problem is not about selling your gear, if your bussines works you will be able to buy all your guitas again and one of vais hands too.
But you have to be carefull because if something is wrong you can get into a REAL problem, which will include your family and the people you love.
RE-THINK

AND GOOOOOD LUCKKKK!!!!
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post #8 of 24 (permalink) Old 05-18-2002, 08:21 PM
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I am only speaking from experience here. I have and have had partners in most of my ventures. In every one of them, I was really tight with the other, but that soon led to problems. ESPECIALLY money matters. I am not a shrink or anything, but if you are not 100% sure of this, I would advise against it, in addition to what Rich and jemsite have mentioned. Very wise are there replies. Sometimes we get caught up in the moment and a deal might seem like a sure thing. BTDT (Been There Done That) and in most cases, it didn't work out the way expected. What is that saying? Don't put all your eggs in one basket?

I have sold my guitars in the past (see topic about guitars sold/stolen) for the same reason...getting into a business deal with very promising results. To this day I regret doing so. I would not hesitate to sell my guitars for health or family matters, though. Some things are priceless. For another business venture.....no way.

Please take this as words of advice and my opinion only. I am just looking out for a fellow member. Whatever you decide, I am sure your family and true friends will support you. I always think this: If I can go to bed at night (or morning for Rich ), and sleep well, I made the right decision. Either way, I wish you luck

Eddie
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post #9 of 24 (permalink) Old 05-18-2002, 11:53 PM
 
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Since my expertise lies in the construction field,I will let you know that 300k in renovations will turn into considerably more at projects end.Be prepared.By myself I am willing to take risks because I know that I am totally responsible from the start.Having been in a business partnership,I will guarantee at some point 50-50 will mean 50-50 of your partners liabilities,personal and professional.I would talk to an attorney and consider incorporating so you are protected,if you choose to proceed.Or like my dad said"a rolling stone gathers no moss"(he doesn't know kieth,obviously!)
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post #10 of 24 (permalink) Old 05-19-2002, 12:46 AM
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I'm definately not saying don't go for it. It's an oportunity, but one I'd proceed cautiously. If your partner is so greedy that he won't follow common sense and take on a third partner, then eventually he'll be just as greedy with the partner he has, you. A third partner splits the liability 3 ways, and leaves everybody enough reserve for the unexpected that will come. It may also split the profit 3 ways, but as said earlier, 33% of a bundle is a helluva lot better than 50% of nothing, with the possibility of loosing everything invested, and more. He wants to make it all on one score, when this score could actually snowball into an empire if cool, level, and reasonable partners are involved. If those aren't your parners, disaster is waiting in the wings.

Of course I don't know the specifics so I could be givning lousy advice. You could be financing 25% more than you "need" on paper to complete the project and have fully calculated in all the possible delays and overruns, then again, you might be cutting it too close, only you know for sure. (if you've done all the homework you need to before you dump half your savings into it)
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post #11 of 24 (permalink) Old 05-19-2002, 02:54 AM
 
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One word: contract! Get a lawyer, incorporate and set a good contract as to who is repsonsable for what. Protect yourself.

I'm with Rich. I'd do a third partner and just cut him in percentage-wise based on what he invests of the total needed.
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post #12 of 24 (permalink) Old 05-19-2002, 03:05 AM
 
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All opportunities as this have risk.
PERIOD.
Don't get paranoid from the seemingly helpful advice here.
It is good advice to keep in your mind.'
Just remember, no successful person became a success with out risks involved.

My suggestion is to bring in a limited investor.
Someone with absolutely no fiduciary interest.
That will solve the problem.

On a business note. If this is a "real deal"
Please call me.
I have access to money in the millions.
I am part of a joint LLC venture that loans money to business people.
Some of our main client are NBA and NFL players, Costco, Sunwest, many Oil companies etc.
These guys are big dogs.
I don't have the millions but am blessed enough to rub boots with them.
I encourage you to email me and speak with us.
If you can validate enough info, one of us would fly up there to evaluate it further.
BTW, yes there is interest.
That's how we make money..
The good part is that once you debt is paid off, we hold no lot in your vestment.

Scott
[email protected]
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post #13 of 24 (permalink) Old 05-19-2002, 03:16 AM
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That's probably the best advice so far, the 30odd% you'd pay to venture capitol is well worth it. The difference in profit between the % and a third investor would be heavily in your favor
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post #14 of 24 (permalink) Old 05-19-2002, 09:50 AM
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***JUST A NOTE:

This is ALL very good, sound advice and I am glad there are members here that I can count on should I need it. Actually, I am absorbing all this for myself for future reference.

Thank you!
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post #15 of 24 (permalink) Old 05-19-2002, 01:02 PM Thread Starter
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I really appreciate all of your responses, you guys are great! As far as contractual agreements, attorneys, fiduciary interest and responsibilities, the bases have been covered. This partner and I have done four rehabs on single family homes with great success. We do most of the work ourselves in order to save on labor costs. Due to the enormous financial responsibility of this project, I am proceeding with extreme caution. I am more than willing to take on a third, fourth, or even a fifth investor to get this deal done.
My partner has become greedy and that is a huge red flag. This is due in part to his exorbitant spending and recent purchase of two new cars. Two expensive cars I might add. Three months ago he walked into one of those multi-brand dealerships, traded his Lexus LS400, then bought a Mercedes S-class and a Lincoln Navigator. I can just imagine what his payments must be.
I'm going to meet with him this evening and discuss the realities. At this point, I am considering doing this without him. I also realize that cutting him out will possibly kill our working relationship.
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