private investor returns

[Matt Reed]

Hi bigger pockets! what is a good return to offer a private investor?
I buy 3bd sfh in the cleveland area......40-60k....rent 750-900/month.Thanks! Matt

[Brian Levredge]

Matt,

I'm doing these myself right now. I pay 7-8% on the money. to make it attractive for investors, I give them a percentage of the gross on the back end that when annualized over four to five years is equal to 15% return on their money. The benefit to you is that you can make a reasonable amount in cash flow because of the lower interest rate. The benefit to the lender is that it gives them a passive ownership stake without the hassles (you should check with an attorney in the state you plan to do this in) of actually owning. I want all parties in my transactions to be successful because it will lead to bigger and better opportunities down the line.