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Updated almost 4 years ago on . Most recent reply

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Jerry Brainard
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Getting Started - How to structure my 1st deal

Jerry Brainard
Posted

Hello all and thank you in advance for taking the time to read this post. 

I am looking to purchase my first property within the next few months, I have my mother-in-law who is looking to be a cash investor and really has no ambition to do anything more then supplying the money. 

My hope is to be able to use the BRRR methodology and use her cash to buy.

My problem that I am most stuck on is how to structure everything, all the way from the beginning. From what I understand, it could be anything that works for both parties and something common is some sort of preferred return of 7-8% per year and then a split after that on the remaining cash. 

Personally this sounds fair, she makes a return on her investment and then a mutual split however that looks. 

But where do we start? Do we need an LLC?

If we did a split, would she be a partner on just the specific properties we work on together, or would she be a partner on the overall LLC? 

It’s just because I also have a larger cash investor who is more interested in multi-family homes and doing the same thing so I’m just not sure how complicated that gets working with multiple cash investors and how to set that up.

really hope I explained this okay and someone understands the question I’m trying to get across. Again, thank you in advance and am very excited to be part of Bigger Pockets.

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29
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Ashley Yoviene
  • New to Real Estate
  • Vermont
34
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29
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Ashley Yoviene
  • New to Real Estate
  • Vermont
Replied

I have borrowed from family as well, we agreed on interest rates and payback length, put it all in writing and signed it. Perhaps we should have done something more official, but my relative seemed content with the loan agreement so we moved forward.

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