Structuring A Deal: Where Do I Start?

[Dalwin Garcia]

Hey everyone! It’s been a while since I’ve been here and I’m in need of some advice. We have a friend who approached us about becoming a silent investor in our next deal. He’s seen the success we’ve had in the last 2.5 years acquiring 4 two-family homes and wants to put some of his money to work. Before finding the deal, we sat down with him so that we’re all on the same page and so that we’re all aware we will have legal documents in place to finalize everything. He’s looking to invest into our next deal $50-$75k and wants a 15% return on his money. Fast forward, we found a great deal in the area we invest in. Purchase price is $240k for this two-family. The mortgage will be under me and we will be coming up with the 25% down payment and closing costs. We estimate the house will need about $60k in renovations. My question is, how should we structure this deal? I’ve read a lot about this, but quite frankly we’re a bit confused and don’t know where to start. This will be our first time structuring a deal so any advice would be great! Thanks in advance!

[Andrew Michael]

There are a million ways to structure deals but to me the point of using other peoples money is so you can hypothetically be in a no money down situation and put your money to use elsewhere.  If you are paying the down payment and closing costs why do you need him at all?