How much equity to offer investor?

[Brian Orr]

I’m in contract on a small deal for 500k. A long time friend of mine expressed interest in being a cash partner, simply looking for a better return than his savings account. This would be through monthly cash flow or the cash return upon exit or refi.

For simplicity sake, if I’m putting down 100k and he offers 50k of that we’re both 50% equity invested at this point. But the loan is in my name and I will be performing all duties, he’s 100% passive.

I know the 50% cash to cash investment shouldn’t be equal to 50% equity. The question is, what should it be equal to? Should it be 10% as it’s 10% of purchase price? It would actually be less I guess because we need about 30k in repairs. Also will need some operating capital to turnover the apartments as we reposition.

I’ve been searching syndication blogs but they don’t seem to address this, or at least I haven’t found one that could give me input on this scale.

Any ideas how to incorporate him into this deal would be greatly appreciated.