What should the rate be for my down payment investor.

[Daniel Spillane]

Hello everyone, I'm currently looking into buying a property with my father as an investor for the DP and Closing Costs. At the moment we are getting close to closing on a home that costs $370k~ with 25% down. At the moment I am trying to figure out what a fair rate would be for my father investing his money, I want to treat him as if he was a non-related business partner. He has asked for a 5% return on his DP investment and a partial share in the monthly rent profit. I consider 5% pretty low, considering he could do better investing in the S&P 500. What do you guys believe is a fair return for an investor who provides the DP? Maybe a 10-15% on the DP amount and/or a 10-25% share of the rent profit? 

Thank you for your time, 

Daniel

[Jim Pellerin]

Quote from @Daniel Spillane:

Quote from @Jim Pellerin:

Quote from @Daniel Spillane:

Hello everyone, I'm currently looking into buying a property with my father as an investor for the DP and Closing Costs. At the moment we are getting close to closing on a home that costs $370k~ with 25% down. At the moment I am trying to figure out what a fair rate would be for my father investing his money, I want to treat him as if he was a non-related business partner. He has asked for a 5% return on his DP investment and a partial share in the monthly rent profit. I consider 5% pretty low, considering he could do better investing in the S&P 500. What do you guys believe is a fair return for an investor who provides the DP? Maybe a 10-15% on the DP amount and/or a 10-25% share of the rent profit? 

Thank you for your time, 

Daniel

 I think 5% is fair considering he's also getting a share of the rent.

Hey @Jim Pellerin, thanks for your quick response! What do you think would be a good share of the rent? 25%?

 @Daniel Spillane You are doing all the work, so 25% seems fair. You still keep the principle and appreciation. He's just a money guy.