Outside Investor Structures for Buy/Hold BRRR with Hard Money

[Michael Malter]

Hi BPers,

I have been acquiring properties through LLCs (SFR-5 units) by using outside investors in combination with hard money. Rather than reinvent the wheel, I wanted to tap the collective knowledge of some structures to have an investment model for buy/hold without locking my own money up.

The pain point is the exit. My rent rolls far out perform the appraisal values. This requires me to park money or put more money into the deal at the end. I have a great product, but how do you pitch an investor to park their money and potentially lock it for a set period of time.

I know rents and appraisal values will increase in time, but I can not account for that when speaking with investors. Anyone have a good model that have been successful with a market environment similar to mine?

As an example, I have a stabilized building I bought for $545k rehabbed it and getting $6200/mo in gross rent and $5000/mo available for debt service (a shade past $1M in value), but my appraisal was only $750k and the refi mortgage is $3271. How do you make it palatable for an investor to want to buy in?

Thanks gang,

Mike