Private Equity Structures

[Angus Brooks]

Hey Guys,

My partner and I have experience using private loans to BRRRR SFHs. We are trying to move up into small multi-family and bring on equity partners. Ideally we would bring on one-two investors to cover the down payment and we would take care of property management, rehabs, bank financing, etc.

Has anyone done deals like this?

What kind of split or structures have worked?

Is there a good way to cash-out investors in this scenario and a reasonable timeline to do so?

The properties we are targeting are 5+ units in the $500k-$1m range. 

Thanks for your feedback!

[Paul Moore]

Hi @Angus Brooks. I agree you should try to do the JV structure. Go to syndication structure for larger future deals.

I’d recommend about a 70/30 split with all cash investors (including you) getting 70. Take property management fees out. Then put in a buyout provision to buy out all cash partners at refinance or when you hit certain metrics. Say 12% annual return plus return of capital to them. Good luck!