Structuring buy and hold venture with investor capital

1 Reply

BP Community: I need your help!

I've been approached by a new investor who wants me to help him find buy and hold multi fam (BRRRR in full effect!).

The question I have is:

Investor is fronting 100% of capital. I am sourcing and vetting the deal, and will manage the rehab, sourcing tenant, etc. what’s the optimal way to structure this?

Is it: consultation fee (ie. Charge $10k to set it up then walk away)?

Is it: profit sharing on rent: 70/30 on all rent and then any refinance, etc...

How would you structure this kind of deal, knowing I’m the “deal provider” and he’s the “cash provider”.

Do I LLC, JVA it S-Corp? I'm also actively flipping with investor money and have raised around $1.4M through a couple of LLC/JVA agreements.

Thank you!!

The best way to do it is to form an equitable split going forward as it is determined in your partnership agreement. If 70/30 is the split you determine, have a lawyer draft the partnership agreement. That gives you both incentives to be able to keep the property profitable and not just an upfront payment and then walking away. (If you do a good job, that 30% split pays far greater than the 10k). I would also recommend you write somewhere into there that the property does not sell until you reach your desired payout. If it is 20k, then you would wait until the 30% revenue hits that mark.