I have a group of 4 very close (25+ years relationship) friends. One of them feels like he found a good investment / rental property. We are considering going in together to purchase it.
The property is a 5-plex of 3/2 units of 2100sqft each. It is located in Colorado, in a good area right between the college and the town center (intentionally vague on location details). All 5 units are currently filled, and bring in about $10.5k monthly. The vacancy rate in the area is very low. The price is $1.5m. The friend who found the place feels that with a sufficient downpayment ($500k) the monthly rent taxes and management fees will be around $6k/mo.
The friend who found the property is pretty savvy and has a nose for good investments. On the surface it seems like a good investment. The friend is currently getting the books for the place to confirm the financials. Said friend has done a similar deal (go in together with some friends) on land that was portioned and sold over time (developed I guess) that turned out well for all involved.
My question is: how good or bad of an idea is mixing our money and friendship. I know that typically it is not recommended, but I also feel like we are a pretty tight knit group. What would be common pitfalls that I should look out for and avoid? Personally I like the idea of acquiring property as an investment. I currently have basically all my money in the market and I like the idea of diversifying into real estate.
Edit: the purchase/management would be through an LLC we set up.
Submitted March 28, 2019 at 12:34PM by upvotes_cited_source https://ift.tt/2V37P9l
