I'm working with an investor to fund the purchase of a buy and hold residential multi-family property and am wondering what typical terms are for this type of partnership. The investor will be silent, but will fund 100% of the deal. I will find and negotiate the deal and manage the property. My question is how would this property be split including equity, cash flow and expense.
Congrats, @Tyson Moulton ! 100% funding is always a benefit. So, essentially you are the "buyer" and "property manager" in the deal? Are you forming a Limited Partnership with this person for the duration, or are they just the lender until this property is producing income and they are repaid? Further, have they voiced their desired return to you in terms of equity and income? For most of us, the only person who matters first in this arrangement will be the one who strokes the check. While most Property Managers generate 7-10% of rents each month for their role, are you negotiating your equity? Asked another way... Has your investor/lender given you a target % at which he would give you an equity stake (say anything purchased below 70% FMV)?
Asking the right questions will certainly give you the right answers. Always include a Real estate Attorney to draft contracts and create structure for you and your lenders/investors. It will both save and make you money as you develop.
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