How generous am i? - Structuring a deal with private money.

[Jonathan B.]

Hi Guys,

hoping i could get some insight about a specific deal i am looking into structuring - First time i am doing this.

i have a deal under-contract:

100K PP + 15K renovations

ARV: 160-165K

Rent: 1300-1350

I have an acquaintance who is interested in partnering with me,

we agreed on the below:

He would contribute 80K on terms:

7.5% Interest only on his capital,

50/50 Split on sale profit.

4 year hold

this would give him about 11-12% return on his investment when we're all said an done.

Am i being too generous?

Did anybody else structure a deal in a similar way?

What do you think of the way its being done?

thanks 

[Ned Carey]

i dont think you are being to generous if he would get 11-12% return. That is less than you would pay for hard money. It is in the higher end of what I would expect for private money. Typically I would expect private oeny to be 8-12%