What is a mini-mortgage in a STR partnership?

[Lou Nicks]

Can someone please explain to me what a mini-mortgage is and how it works when you have a partnership on a STR and one person is the "Money" and the other is the "Sweat equity partner?" How does the sweat equity partner pays the money partner?

[Luke Carl]

Quote from @Kevin Pillow:

This is how I understand what Avery is talking about Lou. Lets say it's going to cost $50k to acquire the property with the down payment, closing costs and pre-paids. The money partner agrees to put up the whole $50k and you both agree on splitting the cost to acquire at 50%. Now you have to find a way to pay $25K ($50k * 50%) to your partner to cover your share of the deal. 

The answer is that the money partner will receive 100% of the net profits from the property until your $25k mini mortgage is paid off. Once the mini mortgage is paid in full, the money partner will only receive 50% of the net profit and you get the other 50%.

Not necessarily. The sweat partner can certainly take income monthly as well. It's just that the entire transaction is 50/50. The sweat person is paying back 50% of the down payment. That's the portion she calls a Mini Mortgage. 50% of the actual mortgage also needs to be paid back. The terms of the payback are up to you. no reason you couldn't pay back your half of the down payment over 30 years. Or take no income until it's paid. There are many ways to structure this.