Rental Property Investor · Miami, FL · Member since 2019 · 2 posts · 0 votes
I'm a new investor as well as a real estate agent. I'm looking to invest in multi families to create monthly cashflow. I'd like to know what are the best ways to structure deals with investors if I'm bringing the deal to the table? Would 50-50 be fair? Also, should the investor be on the deed?
Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
7y
If the investor is bringing the entire thing - cash - and you don't get financing, 50-50 is more than fair. In fact, one can argue, you should give up MORE equity because your investor is taking on all the risks.
If however, you qualify for financing and the investor brings in the 20%-30% equity, then you can do 70-30 (in your favor).
You can also structure it as combination of debt and equity just to make the deal sweeter for the investor.
If you and the investor are buying the property 100% cash, the investor can get 6% on his money as debt and at the same time, be a 50% owner of the property. If you structure it this way, the investor can be the mortgage lender with you as borrower and the title is in the name of an LLC that you and the investor own 50-50.
Flipper/Rehabber · Charleston, WV · Member since 2016 · 172 posts · 126 votes
7y
Hello Claudia! You are just brining the deal to the table and not managing it or the money then 50/50 is probably high on your end. Essentially all you would be doing is wholesaling at that point.
Now if you are finding the deal, managing the project, managing the money, etc. Then a 60/40 or even 70/30 split in your favor is still good for the investor if you are good at what you do.
Whomever is more passive should get less of the split. They are giving up some of the profit for their time.
Yes, the investor should get a deed of trust. Good luck!
Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
7y
If the investor is bringing the entire thing - cash - and you don't get financing, 50-50 is more than fair. In fact, one can argue, you should give up MORE equity because your investor is taking on all the risks.
If however, you qualify for financing and the investor brings in the 20%-30% equity, then you can do 70-30 (in your favor).
You can also structure it as combination of debt and equity just to make the deal sweeter for the investor.
If you and the investor are buying the property 100% cash, the investor can get 6% on his money as debt and at the same time, be a 50% owner of the property. If you structure it this way, the investor can be the mortgage lender with you as borrower and the title is in the name of an LLC that you and the investor own 50-50.
Investor · FL · Member since 2017 · 247 posts · 245 votes
7y
The Best Ever Apartment Syndication Book is a great resource. I listened to it recently and it covers "How-To" structure all types of syndications. Best of luck!