Investor · Charlotte , NC · Member since 2015 · 12 posts · 3 votes
Hello all,
I am looking to buy my third multifamily property in the next 6 months. The problem and question I have is, what is an appropriate percentage of a deal for me to take for sweat equity?
I'm running out of money and my projects are getting bigger, so i'm forced to bring on more partners. What my roll in the deal is as follows...
find the deal, do the due diligence, analysis of all the numbers, make offer, handle all closing etc, handle all the legal LLC paper work etc, we have a property manager but I do all the banking and accounting before/after purchase. My partners are out of state so there isn't much they can do other then write a check, so i'm the "boots on the ground".
the big question is, what percentage of the deal is my work or sweat equity worth that is fair? 10%? 20% 30% 40%?
Evan Griffiths I'm looking for an answer on this too, except for we would offer all of the due diligence etc....for a piece of equity, in addition, we would also offer a reduced management fee structure.
Looking for thoughts and how to structure
Thanks
Depends on who you're bringing in. If you have to reach out to more seasoned investors, expect to share a small percentage 5%-10%. If you have all the experience and you're convincing someone to put up the money, then you would be better off paying them a set return % on their participation and then keeping everything else. It really depend on how involved they plan to be.