Looking for Partnership Structure Ideas
Hello BP folks! I am a Tech Exec that decided about 6 months ago to dive in and research the holy heck out of how to best approach shifting half my investment capital to real estate from just Stocks and Mutual funds.
I put my 4, 10 and 20 year goals together and then built a plan on how to hit each goal.
Then I started networking and learning everything I could here, books and networking with friends and other investors.
I initially landed on just going for appreciation in my town of Austin. Investing is really tight here and rental income is not keeping pace with appreciation. So basically most deals I would be even or cash flow negative to invest.
So then I researched my home town in Texas. Texarkana, TX to be exact and here I can find decent cash flow, but the appreciation was nominal.
My 4 year goal is to create $3k/month net passive income to pay for my kids college in 4 years. I already have a lot saved for college....but how great would it feel if I could keep all of that and just have renters pay for my kids education!
Finally, I came across another area that sent me in a completely different direction. This is an area that is building a lot vacation cabins and the numbers are the best I have seen in my research so far.
My goal is to do 5-10 cabins over the next 4 years. I have bought 2 lots myself and with a real estate agent (partner).
Now I would like advice on looking for other partners: My thought would be this type of structure:
- I have put the entire thing together turnkey (Land, Builder, Construction, Furnishing and Decorations, Property Manager, everything)
- My thought would be the investor would make the down payment:
- We would initially split all equity and expenses 60/40. The investor would get the extra 10% cash flow until their down payment was 75% paid back.
- At that time the LLC would revert to a 50/50 equity, cash flow and expense partnership
- The numbers in this area based on occupancy rate and rental rate and lot of due diligence are : Cap Rate 11.64% and Cash on Cash ROI of 31.34%
- These are $400k + cabins
Sorry for the long message, just wanted to lay it out and see if anyone has structured investment partnerships like the above.
Thanks in advance for any suggestions.
TC