Question on deal details

5 Replies

So some time in January or February I will have some money. I want to partner with someone but not sure on the conditions I should set. I want a percentage of the profit but also want to make money on the money I put in.
What would be a fair offer for me to accept?
Sorry trying to be vague so as to met the requirements of post but want to know where I should start.

i dont think its reasonable to charge interest and make % of profit.  unless interest is really low.  ur going to cut deeply into the managing members profit hence making him work for cheap to give u a good product...  play fare

@Glen Ericsson

I agree with @Kris Haskins .  We partner with several investors and al our investors have different strategies.  If they want to partner on a project then we will split the net profits, we will not give interest on top of the deal.  If they lend the money and want to be completely hands off we will pay interest on the money given.  Cant have your cake and eat it too.  Good Luck!  

If you plan on investing you money in someone else, there are a lot of costs and risks to analyze (risk vs reward):

1. Will this LOSE my money? Do the numbers add up? If you try to flip a $60k home into $120k in a $75k neighborhood, that home will sit empty for a very long time unless you drop your price.

2. Will this project be on budget? If you're house flipping, and the house is 50% complete you'll need to add more money just to finish, which will likely push you from a profit into a loss.

3. How much will I profit? If you aren't at least beating the stock market, the reward isn't worth the risk.

4. When can I expect to get my money back? If you invest and it takes you 2 years to get your money back out, what other deals have you missed? You'll find the "opportunity cost" doesn't pay out as much as you think. If you can make $20k in two years, how many $10k deals could you have passed up in that time span?

Just some food for thought...

Thanks Kris and David.

I hear people talk about 10 points and 10-15% as just a loan. I was thinking like 5 point only, and taking less of a percentage from the sell. I want it to be good for both parties. Truly if I could make 5-10,000. I would be happy. It seems that would be reasonable. It is about as much as I would make if I did the points and the percentage as just the lender. I guess I kinda want to hedge my bet and not ending up making nothing on a deal.

Thanks for the information Dominic.

Hope to find someone that has experience and wanting to build a long term relation. Both of those can help cut down on the risk.

I have to laugh at myself. I wasn't thinking that the amount I have would be enough to be a partner but even if it is only 1/3 of a deal I would be 1/3 partner then. New things we learn as we start out. 

Thanks again for the feed back.