How to structure deal with investor for small multi long trm hold

[Mike Curadossi]

Hello All,

I have a friend on mine that makes a high W-2 income and is looking to diversify by investing in real estate.  

Looking to structure a deal that makes sense for both of us. He will put up 20% down payment to purchase and then I would handle the rest. Looking to have just myself as personal guarantor on mortgages. The no doc 80%LTV 30yr fixed at 4.25% (with 1 point) is most likely how we would finance the properties.

His wife is a stay at home mom so also considering doing it with her so she can over time become a "real estate professional" on their joint tax return and I can teach her the business as we buy more units.

I have been researching ways to try and creatively set something up by a tax reduction strategy for them but it has gotten extremely complicated.

Thinking to just pay them out 8% interest on money invested and then 50/50 on equity growth from mortgage pay down and appreciation. Comes out to about a 11.5% return on rate and mortgage pay down with any appreciation as a bonus. (goes up year over year with more paid to principal and less to interest)

These will be standard MLS deals with light rehab if any so no real value add play. I ran numbers based on a 2 family in my area which goes for $500k and gross rents are $67,200/year. These deals will start off most likely buying 2-4 unit buildings.

Greatly appreciate any thoughts on this because I have done a lot of research and feel like I am just spinning my wheels at this point

Mike