Figuring ROI for partner Investor

[Ryan Russell]

Hey all! 

I am currently writing out a proposal for a potential partner investor of mine to help me purchase my first property. They would be paying the initial 15%-20% for the downpayment on a duplex/triplex deal that we find -- and I want to give them a good understanding of their expected ROI. I want to be as transparent as possible with them and I also want to take this opportunity to learn a little more about the numbers of real estate investing. What is a good way to calculate an ROI? I saw the equation "ROI = (Gain on investment - cost of investment)/cost of investment" but I wasn't sure if this really encompassed well the longevity of real estate investing.

Finally, since this is both of ours' first deal, would it be wiser to invest their money, put some sweat equity into the property, wait a year, refinance, and then give them back their original investment + 15%? Are their any dangers or calculation I could be missing with this financing option? 

Any thoughts or guidance on these strategies would be appreciated! Thanks!