I am pretty new to all of this, but I’m very interested in getting into real estate in the next few years. Just taking time to learn as much as I can. I plan to eventually get into larger investments such as apartments and commercial real estate. I hear a lot of individual state that they have investors help fund the project. Can someone give an realistic example of how the cash flow would look for say a 32 unit apartment deal ? Even how these investors would get their profits as well in the deal. It would be much appreciated gang. Thanks.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Jay Fitts there are may ways to do this. The simplest is have the investor be a lender. They get a fixed interest payment every month.
Another typical way is to make the investors owners of the property (or LLC that owns the property) and they get a "preferred return". In other words they get X% return before you get anything. One the preferred return is reached then anything above that is split.
So 1 scenario you have a loan that you’ll pay off. That’s pretty clear. The other scenario, the investor would get a percentage of the profits. I could see that being helpful. I would guess if the business takes a loss they may possibly take a hit as well. But sound like they never go away in that instance. Thank you for clearing that up. I will be looking more into this.