Fair Equity % For Capital Raise, Acquisition, Rehab, & Management
I've created a small portfolio of 1-4 family properties, where I've found, purchased, project managed a team of contractors through rehab, financed, refinanced, and managed the properties independently.
I've now been approached by investors through my personal network, and I can see the opportunity associated with taking on investor capital; however, what is the best way and structure to take on the additional capital?
My thoughts are - use the capital to gain an equity stake in the company without investing any of my own capital, use the capital and provide capital of my own and take a percentage equity stake, use the capital and pay a fixed rate of interest (approx. 10%).
If I do go the equity route - such as taking 10% initially in additional capital for my services, should I also charge management fees down the road - or should these two activities be separate?
It's a lot easier to figure out going the fixed interest rate route; but it would also depend on the requirements of the investor (whether they want equity, or a fixed rate of return).