What is a good CoC ROI for a passive partner?

[Shawn Stiteler]

Hi BP family!

So I’m looking to put together a deal that I’m working on. Pretty basic here, duplex for sale, price is $149,900, rent total for both sides is $2,200.

PITI is about $890 with a 20% down pay ($29,980).

My goal is to bring in a partner for the down pay, while I manage the property, and they just get to share in the cash flow. However, I have never done a partnership deal before and want it to be fair on both sides. So my question is what is a fair ROI for the silent partner?

$2,200

-35% (10R,10capx,5vac,10PM) -$770

-PITI (principal, interest, taxes, insurance)-$890

Cash flow-$540

/2=$270 (11%)

So is a 11% ROI a good deal all by it self?

Or would they need to share in the equity gain too?

Any advice or basic partnerships lay out would be of great help! Thanks all!

[Andrew Hogan]

@Shawn Stiteler what are you underwriting it so sell at in 3, 5, 7, 10 years? Have multiple exit strategies so you can protect your downside risk and project what the overall returns would be if you did split the excess cash flow 50/50.

Also, be careful with calling it a silent or passive partner because that officially requires a PPM with the SEC.
You'd probably tell the partner it's a JV and you're doing the vast majority of the legwork ;)

Good luck man!