BP Calculator Question
6 Replies
Mike Street
Property Manager from Exeter, NH
posted about 2 months ago
Hi All,
Is there a way to use the calculators so that partnerships are taken into account? For instance, a partner puts more money into the deal, so their returns will look different then mine (less money in the deal). If not, do you have any suggestions? Thanks!
Joseph Firmin
Rental Property Investor from Smyrna, GA
replied about 1 month ago
Not that I know of Mike. You could just take the returns and split them per the equity structure though, based on each person's capital contribution - pretty straightforward.
Mike Street
Property Manager from Exeter, NH
replied about 1 month ago
@Joseph Firmin thank you for your feedback. How about when one partner contributes much more capital and the other partner handles the operations and found the deal? If the equity is still split then how is the deal made attractive to the partner who has more money in the deal? The assumption is they would have a smaller CoC return and ROI.
Joseph Firmin
Rental Property Investor from Smyrna, GA
replied about 1 month ago
It would still be a return in his capital invested, so if he invested $100k, and for his equity share received $10k I distributions during the year, he’d have a 10% return. So if it was a 50/50 split, the other partner would also have received a $10k distribution.
Mike Street
Property Manager from Exeter, NH
replied about 1 month ago
@Joseph Firmin and the other partner that put much less money in the deal would see a much greater return on investment. The investor would be fine with that because he is still getting 10% return on little effort. Is that safe to assume?
Joseph Firmin
Rental Property Investor from Smyrna, GA
replied about 1 month ago
Depends on the investor... can’t say, what are his other alternatives, it could also be a different equity split. Don’t assume anything. Just offer a fair deal for a fair projected return.
Mike Street
Property Manager from Exeter, NH
replied about 1 month ago
@Joseph Firmin Got it. Thanks for your help!