Takeout when using OPM

[David Edwards]

Hello BP, 

I'm currently looking at a few deals that are showing potential to return in the low to mid 20% CoC. The problem is I'm tapped out on personal capital from picking up a duplex a month ago. I have an investor that has shown interest and we have initially discussed terms where they receive a 15% preferred return and then we split anything above that (I know this may not be the best terms on my end but I'm interested in the process and it could be a relationship builder, plus infinite return if I put nothing in). The sellers agent has indicated that seller financing may be an option with a balloon at the end of a 3 year period which would require getting traditional financing and paying the seller back.

My initial thought was that the way this deal could be worth it (aside from experience) on my end would be to pay back investor after a predetermined period (3-5 years) and holding onto the property. My question for you experienced OPM investors is this. How do I ensure that the deal is structured in a way where I can get them their capital back after the financing period, and is this something that's typically done? 

Aside from the worst case scenario of not being able to get financing for the deal and I guess having to give the place back to the seller, the second worst option that I'm seeing is having to pay the investor back myself as their funds will be tied up in the property.  

What are some of your strategies for managing this sort of thing?

Thanks in advance!

-Dave

P.S. I've already got the BP book on low and no money down on its way.