Partnership structure that attracts investors?

8 Replies

Seeking advice or examples of partnership structures that would interest buy and hold investors.

I come across cash-flowing, turnkey properties but don't have the 20%-25% downpayment to obtain an investment property mortgage.

As the active partner, I can offer to market, rent, manage and pay the expenses.

What would be the best way to structure a partnership with an equity partner?

Thanks,

@Fabian Kulynych

Partnership structures vary and depends on who is investing.  I would ask your specific investors that you have in mind that question and start from there.  It is all a negotiation at the end of the day and there is no right way to do it.  There is however a wrong way and that is where you are not making enough money.

Thanks for the feedback Luke!

I've not worked with investors yet.  I've done all of my investing alone.  But I'm looking to scale up and I'm looking how to best approach potential investors.  I'm very interested to see what other investors/partnerships do and get up to speed on what's being done by the community.

Thanks again!

Originally posted by @Fabian Kulynych :

Seeking advice or examples of partnership structures that would interest buy and hold investors.

I come across cash-flowing, turnkey properties but don't have the 20%-25% downpayment to obtain an investment property mortgage.

As the active partner, I can offer to market, rent, manage and pay the expenses.

What would be the best way to structure a partnership with an equity partner?

Thanks,

 Do you have any marketing experience? That is the real skill you are gonna need if looking to go down this route. Sounds like you have a reasonable set of skills to bring to the table, the hard part is going to be you being able to demonstrate that skill set to enough investors to get some to bite.

@Fabian Kulynych   Each and every deal can be structured uniquely--one thing I love about the business.  We typically offer a Preferred Return to our investors, which gets good feedback and is attractive to investors. I know people that don't offer a Pref and do really well.  @Luke Chung 's advice is great.  I might also have a few options to present to your close group of investors as you get going--see what they are comfortable with. 

Good Luck!

Thank you gents for the feedback.

I do have marketing experience to fill up my vacation rental, and I'm looking to get some experience marketing to potential investors and getting investment capital!

I'm thinking of offering investor/partners (that contribute the 20% +/- to obtain a mortgage) 100% of the purchase price in 15 years when the mortgage is paid off (about 10% irr), I manage and make all expense payments and get any leftover cashflow and/or appreciation.

Thoughts?

Thanks again!

Putting my passive investor goggles on, 10% wouldn't be enough to attract me for an investment.  Once again it just depends on who your circle of investors are and what they want.  I actually did a youtube episode on this topic.  PM me and I can give you a link to it if you are interested.

No cash return for the first few years, but they would get the equity build-up via mortgage paydown and any appreciation. 

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