What would you consider a fair return?

[Scott Williams]

A big plus of being a real estate agent is the ease of making alot of lowball offers.

I have noticed some banks do a good job of gradually lowering their prices until a property sells, others tend to let more of them sit x amount of time and finally take a lowball offer way below their asking price.

I have a little cash, and have bought a couple of houses this way, though I live in one and sold the other on a land contract, so do not have any amazing return stories to share with a potential investor.

Lately I have been thinking of trying to find someone to go in 50/50 on the purchase with me.

My question is..what should I offer them? Was thinking of 12% interest on what they put in plus 20% of the profits. Would add them to an llc, llc buys and immediately relists property, split cash up when property sells.

Small amounts, only looking for 5k-10k and thats all I can afford myself. Is this even a realistic idea with the small amount of money involved?

For what its worth the market is not great in Michigan, you would be suprised what 20k can get you.

Thanks, Scott

[Jon Holdman]

Usual split between the "money guy" and the "do everything else" guy is 50/50 on the profits. Your offer of a preferred return (the 12%), though, is pretty generous. I suspect you may get takers based on that alone.

As the lender, I'd want to have a deed of trust, not just be an investor in an LLC.

You also need to be careful with getting investors in LLC. If its your good buddy you've known 20 years its probably OK. If its someone you've just met, probably better to do the loan. Getting investors into an LLC is selling securities and is highly regulated. There was a recent post that made it sound like even the lending was dicey.