Private Lending Ownership Structuring

[James Johnson]

Hi all,

As to abide by all BP rules, I want to emphasize this is not solicitation, but instead simply looking for information.

My business partner and I are looking into somewhat of a set of BRRRRs on a 4-8 top and have been approached by friends with extra capital in order to fund the start of the project. As we are new to private funding, we were trying to figure out the structuring of the deal in order to entice the our investors, but maintain the majority of ownership. Below was the initial thought, but was hoping to hear tried and true structuring as well as agreement documentation if at all possible.

Investor(s) - 25% down payment with 10% emergency fund initially.

My partner and I - Find deals, do maintenance/rehab, find tenants, collections, etc.

As monthly cash flow begins, pay back the 10% emergency fund to the investors.

5% monthly profit after Opex goes to investors in order to see some monthly cash

Overall ownership

- 35% equity and 5% monthly post-tax CF to investor(s) to give a 66% return if value remains constant

- 65% equity and 95% monthly post-tax CF (to include emergency fund percentage, etc) to my partner and I

Would love to hear any and all thoughts on the matter!