How to pay back an investor

3 Replies

If I have someone that invests let’s say 50k, into my deal, what arrangements can be made to pay him back? I read and hear how good this to have this done but have not heard anyone explain how the investor is paid back. I am totally clueless. Thanks, Chuck

@Chuck Rhodus A little unclear as to if they are functioning as an HML or an equity partner...

If it's a loan, you can do a promissory contract and spell out the terms. If an equity investor, you can make them LP in a LLC and you the GP. If it's a small deal, you can probably just do a contract.

Paul Choi

    Originally posted by @Chuck Rhodus :
    If I have someone that invests let’s say 50k, into my deal, what arrangements can be made to pay him back? I read and hear how good this to have this done but have not heard anyone explain how the investor is paid back. I am totally clueless. Thanks, Chuck

     You split the profits 50/50. I use a master Joint Venture agreement that outlines the arrangement. I have a second agreement that specifies the property and is used when the investment property is located. In my case, I have 51% ownership so management decisions can be made and give 50% profits to partner. We specify the exit strategy, what happens if one person wants to exit the agreement and how long we hold the property. I am the management investor and the other is the capital investor. On $50k investment the capital investor makes about $180,000 profit on a 10 year return with paid quarterly cash flow of about $500 per month, so about $1500 paid quarterly and plus an up front payment return of $12k at time of sale to new tenant buyer with a back end of about $12k when tenant buyer refinances. The key is in finding the correct properties. I have several properties currently looking for investors. It really isn't that difficult. 

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