I am in a position where I have a silent investor (I am doing all of the work) who wants to get involved on the next deal and will be providing all of the capital needed for closing and the down payment. I am planning on structuring the deal as follows:

  • Investor puts in all of the funds needed for the down payment and closing costs
  • Each month the investor receives a preferred return rate of 5% of the profits. This monthly preferred return payment continues until the investor's initial cash contribution (down payment and closing costs) are repaid in full.
  • The remaining monthly profits are split 50/50 between the investor and myself.
  • If we sell the property (for a gain) the mortgage gets paid back first, then the investor gets their initial contribution back, then the remaining profit gets split 50/50.

Do you think my structure is reasonable? Do you think the process when we sell is fair or favors one side too much? How are you structuring your partnerships?