How to distribute profits between investors

[Victor Gomez]

Hi All!

I have been struggling with figuring out how to distribute money money between investors when raising money for a real estate deal, and maybe you guys can help me out to understand this.

I see investors looking for investors, and they offer 12% returns annually with a minimum to invest. I wonder how is this possible? How can you give somebody 12% if they invest the minimum, and also give 12% to somebody that, let's say, invest double the minimum? It just does not make any sense to me.

Does anybody understand how this process work?

For instance, let's say I am looking for investors to put $100,000. And I know that my property has $10,000 of return annually. If I tell my investors that I will give them 12% annually, I would be lying on this case, Ince 12% is more than what we make, correct? So, how do I calculate how much to give the investors?

Hopefully I explained myself clear :)

Thanks a lot!
Victor.