How investor relationships are structured

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This has probably been discussed but can someone give us some guidance on how they structure deals with investors when they are brought on board. For example, if someone invests $5000 on a $100000 property would you give them a flat percentage return over a specific period of time (so more like a loan) or would you give them 5% ownership of the property? My presumption is most investors want part ownership. How, then do you structure their profit and loss as a percentage owner?

It is a complicated answer, with lots of parts.

For smaller $ deals with borrower < 10 deals completed, the simpler answer is 1 loan, 1 borrower, and 1 lender.

If you really want to help someone lend... with the equivalent of a 5% equity position, have them get 15-20 buddies to form an LLC as one entity and then let that LLC (1 lender) be the lender on your deal.

Or tell them about lendingclub,com and/or prosper.com ... but dealing with a bunch of 5%ers is not in your best interest.