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.
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
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.
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.