Updated over 9 years ago on . Most recent reply
Have investors, need business plan
I am in a rather unique situation of knowing a small group of people who is interested in investing in real estate, have money, but no time or wish to put in any work themselves. I've known these folks for many years and they regularly hear about my side real estate investments - a handful of single family homes, minor renovations, hold and rent. They know that my properties are cash flow neutral and that I'm in it for the long term payout (principal paydown in 15 years with low interest, and hopefully, nice appreciation). Recently, they have offered to "back me" with their money purely because they want to get into RE investing. These people make plenty of money at their day jobs and are not looking for a monthly payout (though I think they would welcome an annual payout of some sort). Mostly, I think they just want to diversify their portfolio, which is the same reason I'm in this game. We haven't talked numbers yet, but I am guesstimating that as a group, there is at least 250k to invest. They've asked me to give them a proposal if I am interested.
So I've crunched the numbers and don't see a way for this to be profitable for me to loop them into my current plan. I would be putting in the not insignificant work of finding, financing, renovating, and leasing. I justify doing this for my personal investing for the long term payout. But given that we're two full time working parents with kids, it's diminishing returns to take on more work (for others) without significant personal payoff. And neutral cash flow SFRs do not look like it manage that.
So my extremely broad question is this: How do you accept investors and get a fair payout for yourselves? I am not interested in short term flips and am more of a hobby RE investor.