How to Structure Investor's Returns on a 14-Unit Multifamily

[Travis Hewlett]

Hello BP,

I hope everyone is having a successful and productive 2018 so far! I would love to hear how other investors structure the returns for a financial partners on small/medium multi family buildings? I am currently negotiating on a 14-Unit Multifamily in a small town in rural Alberta, Canada. I grew up in this small town and currently live in the city of Calgary which is 2 hours away. I found the deal by driving for dollars, taking down all the addresses of the multi-family buildings in the town, going to the local registry office to pull titles, and cold calling all of the multi-family owners. I found a lovely 80yrs old couple that have the 14-unit building running very well, but are ready to finally retire and relax! We are in the negotiation stages and I should have it under contract this week.

There aren't a lot of options for property management in the town, so I am going to have to manage it remotely for a couple of months until I get a family member trained up and ready to look after it. The deal provides really great cashflow and there is lots of room for management fees. 

I have an investor that is willing to put up the initial down payment and closing costs. We had previously set up a 50/50 Joint Venture agreement on a 4-plex. The financial partner qualified for the mortgage and put up the down payment, closing costs, reno's etc. Once his initial investment was paid back we split the cashflow/equity 50/50. I found the deal, property managed, etc. Will this type of deal work for a 14-Unit or should I offer more of a preferred rate of return until we re-finance and I can pay back the initial investment? He will likely want equity in the deal, but I'm not sure I want to give up 50%. 

Any advice on how to structure returns to investors on small multi's would be very helpful and greatly appreciated! Thanks and happy investing!

Travis