Creating a financial model to raise capital
Hello everyone, this is my first post in BP, hopefully I can get to the point quick.
I have built a model that represents my plan in raising capital to purchase a four plex. With this I have an amortization table coupled with rental income data. My question is whether my idea is worth pursuing or not. I would like to raise capital, 25% of purchase price, and guarantee a total rate of return for the private lender of 9.5% over the life of the deal.
To achieve this return I have built in that 40% of net rental income and 65% of the profit from the sale of the four plex will be returned to the investor. The summation of this is equal to the future value of their funds at 9.5% for 5 years. Additionally, would it be better to pay a monthly, quarterly or annual dividend to the investor or to pay one lump sum at the end of the relationship?
While I would not be exposed to this deal in form of cash, I have drafted a plan stating that there will be a "savings account" which will be a line of credit from a single family rental of mine which is currently at ~70% LTV. With the model I feel I have made assumptions on the weak side and that the true payout would be closer to 12% for the investor.
Before I try raising capital and pursuing the plan I would like to see what folks in this world think of the idea. I don't know if many people do the mix of rental income and real estate appreciation to determine a payout. Thank you for looking over this, I appreciate any and all advice.