Using Private Money for Marketing

[Aaron Rowzee]

Good afternoon, guys and gals. 

I have had a few interesting conversations with 2-3 people in my circle of influence that want to participate in REI, specifically my recent success, but they are both gun-shy in committing to any specific "complex" real estate deal, and have sub-$5,000 amounts they are wanting to commit.

Without getting too much into the minutia of their mindsets and arguments, it is important to note that they are willing to give a much smaller amount of money for advertising and, in return, are expecting a faster, albeit, higher risk return through wholesale deals obtained during that time frame.

My actual question for you is: have you ever structured any kind of private funding "deal" that officially goes towards your marketing in exchange for a piece of the net profits for (insert time period)? I'm curious the different ways this could be structured to ensure some measure of return for each lender.

Examples:
Campaign A:

• Physical mailers
• 6 letters per address
• Distribution over the course of 2.5 months
• $2,500 budget

From start to finish, each lender gets a percentage of the deal based on the percentage of the marketing budget given. I keep 50% of all deals, while the other 50% is broken up between lenders. 

Lender A gives $500 and receives 1/5th of 50%
Lender B gives $2,000 and receives 4/5th of the 50%

Google Adwords Campaign:

• PPC on SEO website
• Budget is paid per 1 month billing cycle
• Budget $2,500

From start to finish, each lender gets a percentage of the deal based on the percentage of the marketing budget given. I keep 50% of all deals, while the other 50% is broken up between lenders.

Lender A gives $500 and receives 1/5th of 50%
Lender B gives $1,000 and receives 2/5th of the 50%

Lender C gives $1,000 and receives 2/5th of the 50%

All lenders get a copy of the lead tracking reports from either source for transparency's sake. Thoughts?

**Edit: It is also relevant to note that the true end goal of this type of setup to to get my private money investors (who know nothing of REI) to get more comfortable with my process and success, as well as, increase their cash-in-hand to reinvest in me down the road on much bigger deals.