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Updated over 2 years ago,
Structuring Equity Raises and Repayments for Down Payment
Hello - Up to now, I've been using my own savings to cover the down payment on mortgages for real-estate. I've been trying to educate my self on raising outside equity to cover a portion, if not all, of the down payment. The part I'm struggling to find information on is how the structure of such a deal would work, mainly around when it comes to returning the equity back plus any additional upside. I've listed below some specific questions that I'm trying to understand:
How do you split the monthly cashflows after initial closure to begin repaying equity amount? After mortgage payment, expenses, etc. should all cash flow be used to repay investor? If a portion, how do you decide on what %?
Upon paying back the full equity amount, what percentage of future cashflows, if any, goes to investors?
How does ownership of the property work when raising equity to cover the down payment?
Any information on examples on structuring deals would probably be most helpful as I'm sure all this varies by deal.
Thanks in advance for your advice!