Real Estate Agent · Hershey, PA · Member since 2019 · 66 posts · 54 votes
Hello everyone,
I wanted to get some idea's of appropriately structuring partnership deals when providing investment opportunities within your portfolio. I have several BRRRR's that I've completed over the course of time and as I'm sure many other long term buy and hold investors experience, I have several people wanting to "invest with me" or in my deals.
I actually have one right now I'm doing. 6 unit with two garages I bought here locally in Central PA. It's a BRRRR that I just finalized renovation on. If I get 80 or even 75% cash out at refi I will have replaced my purchase and rehab costs. However, what I'm interested in doing is taking something like, $100k from an outside investor. I'm trying to figure out a structure that would allow me to essentially pocket the $100K rather than applying it to debt. Additionally, I would rather not use a significant amount of cashflow to factor in the return to the outside investor. I'm happy to give up equity but would rather keep most if not all of the cashflow. Let's assume the "term" is 5 years for both the bank loan and the $100k outside money.
Assumptions: 5 year term. 80% LTV, Financing ~600K with an appraised value of 800K. $2,000/mo net cashflow. Property to be refinanced, sold or exchanged after 5 years. Let's also assume independent investor wants 12% annualized return on $100k investment.