How Much Experience Before I Bring On Investors?

Question

I have my first investment property under contract.  I'll pretty much exhaust my savings in acquisition and repair.  In discussing my goals and approach with a couple of people, they expressed an interest in investing money in the idea.  As I was unprepared to have such a conversation, I simply said I'd consider it and get back to them.  Do I make them partners in each deal where ownership is shared?  Do I offer a minimum interest rate for their investment and additional bonuses for certain benchmarks being met?  I know there are some SEC issues so I'm treading lightly.  Please let me know what you think.  Thanks

Jay Hinrichs · Answer

we do participation loans all the time.. its a HML with a equity split delineated in the Promissory note.. works pretty cool.. do that with mainly small builders on their housing projects.. they always need partners..

Taylor L. · Answer

If you want to do a partnership they'll need to have an active role in managing the investment, such that their return is not earned passively. They can also make you a hard money loan, which you pay points and interest on. You'd have to ask them what fraction of ownership or return on their money works for them and go from there.

Luis Bermudez · Answer

@Taylor L. @Jay Hinrichs

thanks so much for your input.