My plan, with questions along the way...

[Brandon N/A]

Alright...Iong story short...I'm 25 years old and am going to start my REI career / company this year. I have no money of my own to invest, but have 8-10 people who are willing to invest their money with me.

I have located a distressed, poorly run property (2 units, each with 3 apartments) and ran all the #'s. I will only pay $160k for it (with $20k down), and at that price + $15k worth of renos, it will flow just under $4k per year after all expenses.

My question is - although this is a small property, should I create an LLC company, or would creating a general partnership be suitable? I have no idea what I should do here, but would like a general idea before I speak with a real estate lawyer (which I will do for sure).

Also, in terms of financing - what is the best way to structure this? I would like to be the principle owner, so obviously I should have a higher ratio of debt vs. equity financing...does anyone have a business model they can send for this same situation (purchasing an investment property with multiple investors). I was thinking 3:1 debt to equity.

With regards to repayment of the debt financing, I plan on pulling out equity in the property (after I increase its value thru renos) and making full repayment within 18 months.

With the equity investors, what share would they get? If I raise $40k, use $20 for a downpayment and say $20k for renos, and structure it 3:1 debt to equity that means $10k is equity. If 5 people each put in $2k, does that mean they each have an equal share (20%) of the 25% equity? If I sold the house for $200k in 5 years (say it was 100% paid for for the sake of the question) does that mean they all get an equal share of the $50k (25% equity)? Is it that simple? Am I missing something?