Updated over 10 years ago on . Most recent reply
Calculating Fair Terms when Investing in Real Estate Renovations
Does anyone have some direction they could provide on calculating fair terms when partially funding the renovations for a House Flip or a Buy & Hold?
I currently have a Business Associate who has a 3/1 house in Greenwood Alabama which was acquired through a property that was included on a probate deal. The property needs another 30K for renovations and expected to sell at around 110K once renovations are completed. There is a decent profit margin.
The other option that we have is holding and renting out the property. The estimated after-expense cash flow is around $800 monthly. Does it make sense to set percentages based on the total investment in the property? How does this normally get calculated? Any insight?
In summary, the question I have is: Is there a somewhat standard way to calculate the percentage of profit for a partial investor in these scenarios?
Can anyone point me to some resources to assist in calculating something like this? Thank you in anticipation of your feedback and/or assistance.