What Can I offer an Investor?

Question

Hey everyone - Kevin here!I have been approached by 2 investors who would like to offer my company, SoFlo Flips, about $100,000 total in exchange for some kind of return on the investment.My company and I have done about 6 fix and flips over the last 4 years and all were for a profit here in Boca Raton, Florida. I am the CPA and licensed Florida Realtor and my partner is the Project Manager/General Contractor. Up until now my partner and I just split the profits 50/50.But now with 2 other potential investors on the horizon how do I make it fair for everybody? Side note: These 2 investors only want to contribute their money and be a limited investor. Me and my company would be responsible for sourcing the deal, rehabbing the investment property, and then selling it. Everything from A-Z will be the responsibility of SoFlo Flips.Hypothetically lets say that the profit on our next flip & flip is around $30,000 and it takes about 6 months total from the time we purchase it to the time we sell it. What kind of return would you offer the investors?

Jonathan Barr · Answer

@Kevin Medina

Usually with investors when they put up all the cash we have split the profits 50/50. If you are realtor that would not include any commissions you could make.

So I would say 50% is your sweat equity no matter what. That 50% would be split with partner for sweat equity I think you can split the other 50% according to what everyone contributes. From there everyone would get a prorata return based on the portion of equity they provide. Does that make sense?

That’s simple way to do it. Though some investors may want some guaranteed. Maybe you can give them in exchange smaller portion of the upside. Hope that helps.