Quick Question / Help Structuring an STR Deal
My dad came to me and asked if I can help find him a property to AirBnB / create an STR out of in Nashville, TN. He has $400,000 - $500,000 cash he is willing to invest and wants me to find the property for him. Him and my mom want to visit say 3-4 times a year and then Airbnb the rest of the time. I am working with realtors in TN as we speak (*nothing has been signed).
I was talking with my wife and trying to figure out a way to fit myself into this deal. I have always wanted to invest in real estate and I love the idea of owning an STR property in Nashville, TN alongside my dad as partners!
The problem I am having is coming up with a way to structure a deal to work together!
I have $15,000 cash I am willing to invest, which obviously isnt a lot and Im having trouble trying to come up with a way to invest alongside my dad and get some sort of equity or % of the monthly income the STR would bring in.
Say I put in $15,000, my dad puts in the rest to equal 20% down on a $600,000 property = $120,000 total, $105,000 of my dads, say $15,000 of mine, that would equate too 2.5% ownership, and lets say I get 2.5% of the monthly income the property brings in, thats a paltry number. or 2.5% of equity in the property, that doesnt equate to much either. I would love to somehow put this money in and earn an additional $100-$200 a month while having equity in the property and my dad can take the rest of the profits after mortgage payments, expenses, etc.
I am happy to do this for my dad as a favor but id like to make it worth it for me to spend the time finding 5-10 properties (have to imagine a bunch wont work), maybe more!
If I cant come up with any ideas on structuring the deal, I will obviously do this as a favor, but im just trying to spitball someway to invest alongside him and help me in building assets
Any ideas on ways to structure a deal that would work for me & him?
Thanks guys! I hope I dont come across as trying to take advantage of my dad in this post, that is not my intention at all, I am happy to do this for him as a favor and spend the time finding properties, working with the agent, etc.
Thanks for the response Nathan, really appreciate it!
There is no right or wrong answer here. I have asked this exact question myself on these forums. Then I realized I was overthinking it. I didn't see any mention of who would manage the day to day activities of the STR. I think that would be a good opportunity for you to increase your cash flow. That might look something like this.
You: Find the team (realtors, lenders, cleaners, contractors) - Dad: Funds and finance the deal with 100% ownership. - You: Manage the properties for 10-15% of the revenue. - Dad: Buys multiple properties and places them in a Trust with YOU as the beneficiary. - You: Receive a healthy return on your time until the properties eventually become yours one day anyways. Save up the cash flow to buy your own deal.
Just a thought
The most challenging part of this whole thing is going to be finding an NOO STR property in Nashville for under $600k.
Unless you're good with a 1 bedroom apartment.
