You are looking at the problem backwards. Ask him what he will accept. You might want to compare this to leaving the money in the bank, or a CD, where he will be less than 1% interest.
If you give him a better return than any bank in America, backed by the security of real estate, purchased below its actual value, and backed by your personally, what is the least he would accept as a return?
You have a friend offering money to invest. Think of this as a private money deal. Ask THEM what their terms are. What return do they want? You will want to give them a lien position in case the deal goes to pot. I have an acquaintance going in with me on a deal and she wants 10% and first lien position. But she has more experience than I do.
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