Equity Partner/Private money

[Jane Irwin]

New to REI....Does this sound like a good way to start slow with a low monetary investment?

The deal presented...  an investor will invest  $10,000 and own 25%of the  home. The monthly returns are based on the amount of investment, and the house invested in. There is only one investor to a home, all deals are secured by a legal contract drawn up by an attorney.  The place will then give a monthly return of $1100, giving the investor $275 a month.  (dependent on amount put in etc) The investor is paid 275 whether rented or not and if house is sold the investor than gets 25 percent of sales from house. The investor has no say in any of the decisions with regards to the house.  

Seems like a simple deal to get started and partner with someone if the contract is specific. 

Is this a good strategy for a beginner and what traps or loopholes do you look out for in this kinda deal.     

[Guy Gimenez]

@Jane Irwin

The deals are always simple right up to the point where.....well, where they're not simple.  If you can afford to lose the money and not lose sleep, the go ahead.  However, if you're thinking someone else will care more about protecting your money than you do, then it's time for a refresher course on human nature. 

Contracts are only as good as the people who have signed them, and they're often no better than a handshake deal. Sit down at night and watch "American Greed" as this very scenario is often depicted the end result is seldom a rich, happy. safe investor.