Family/friends Investing In Your REI Business...

I have family and friends that want to loan me capital to help me fund more rehab deals. Of course they want a cut of the deal. Lets say someone loans me the downpayment, closing, fix-up and holding costs for a deal, what kind of return should they expect? I've heard 50% of the profits less $2000 for myself since I found and managed the rehab.

Can someone tell me what ROI structure you use when using someone else's money? Thanks in advance.

Comments(3)

  • TheFox15th September, 2003

    As an investor in your structure, I'd be holding all the risk but much less of the potential profit. If your investor is comfortable with that, I say go for it.

    All I'm saying is I'd as for a bigger cut as the investor. (Unless you're putting in the labor for the rehab, etc)

    Just my $.02

    TheFox

  • coorsfield15th September, 2003

    Thanks Thefox.

    What do you see as a fair return for the investor--65%, 70% of profits.

    By the way, I'd be acting as the "general contractor" and possibly doing some labor (interior paint, landscaping) in the rehab.

  • Raj21115th September, 2003

    Ask them how much they expect to make and then come to an agreement. I think .20 on a every dollar is more than fair but you be the judge.

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