How do you handle investors?

Question

***Mods I'm sorry if this is the wrong area, if so, please redirect***

Hey Guys,

I am starting to get people approach me about investing in my business. There are some who want to invest a substantial amount i.e $100,000 but there are other investors who want to invest as little as $3,000 to $5,000. I have several questions.
1. How do you usually structure your deals with private investors/what do you promise them?
2. Do you structure the deal differently when dealing with a small investment?
3. What steps do you take to keep track of the investments/profits of each investor?

I know this is a very broad question but if more info is needed to answer then please ask away.

Rob Beland · Answer

It's a loan @Bruce M.  The interest is paid at 12% on an annual basis but you should only need the money for a few months. You determine how long you will need the money but with a rehab/flip you don't want that money out there more than a few  months (six months tops hopefully) then you either sell or refi depending on your exit strategy.

Bruce M. · Answer

Good point @Rob Belandthanks.  Also what I'm trying to figure out is should I do that on a per deal basis or per year.  I know either way the investor will benefit but say if I have a family member invest 3-5k, they may not want to wait a year.  Just looking for ideas here.

Rob Beland · Answer

Give them 12% interest on their money.  Keep the equity for yourself... They aren't getting 12% from their credit union are they?