How to best approach acqiuring private money on apartmnent deal?

[Josh Hubbard]

My partner and I are considering the most optimal way to structure the private money portion of a potential transaction.  We are currently looking at a 11 unit apartment building that would require approx. 140k down payment.  We have colleagues that would take the opportunity to lend and we are considering ways to approach / structure the deal.  Ideally we would borrow the entirety of the 140k, keeping our reserves for maintenance and other expenses on the property.  Additionally, we currently own an sfr free and clear that would appraise for approx. 90k and a duplex with 20k of equity.  Any suggestions on how to approach this?

[Jeff Greenberg]

If you are getting a loan from the private investors you may be able to avoid the SEC regulations.  As soon as you offer a piece of the profit, based on the sole effort of you and your partner, you enter into the securities world and have to follow their rules.  If you are going the path of profit sharing, I typically see a 50/50 split after all invested capital is returned. It would be up to your investors as far as your skin in the game, but if you are covering rehab costs, that may suffice.  Don't forget closing and loan costs in your calculations.