How to Calculate ROI for Investors

[Andres Vanegas]

Hey folks - looking for some clarification here. If I have terms with a money partner that state after 8% ROI for them, we split profits 70/30 does that mean after they have regained 8% of their initial investment, we are splitting profits 70/30 or is it on every pay out after 8% we are splitting 70/30?

For example, they finance 100k for the property. We make 10k in profit after year one, we decide to distribute this capital to ourselves. 8k to money partner, 70/30 the remaining 2k. The next year we profit 10k again. At this point do we, A- distribute 8k to the money partner again, 70/30 the remaining 2k or 70/30 the entire amount. The argument for the latter is that the money partner already made his 8% ROI so all remaining profit distributions would fall into the 70/30 bucket.

Might be a silly question, but thought I'd get some clarification regardless.

Thanks in advance!