Private Lender Or Partnership - what would you do?

[Tara Kinney]

So I'm blessed to work in a profession where I am in constant contact with higher earning people. I recently had a discussion with a collegue that is unhappy with his return in the markets (shocker...) and he knows that I have started investing my money into buy and hold real estate. He approached me and said he would be interested in investing money with me and be happy with an 8% guaranteed return. Now I personally won't purchase a property unless it provides me with a minimum of 12% COC return so this could potentially have a scenerio here where I could capitalize on a project without any of my own money out of pocket here and receive basically a free 4% (or higher) return without any of my own money down. Or...I could put my own money into some higher dollar projects as well. My goal this year is to purchase atleast 2 4-plexes or higher in 2019.

My question is, if you were given this option....how would you choose to structure a deal?  Partnership or private lender?  What is your reason?  How long would you structure a deal for?  I've personally not done a partnership type situation though I have done a private lender.  Just looking for some ideas/strategies that could benefit us both. 

And GO... :)

[Tara Kinney]

Thanks for your advice. How would do you suggest you use a private lender in a situation "OTHER" than a BRRRR? I am using a private lender currently for a BRRRRR, and that is working out great for THAT property.....however, not all my potential investments will necessarily be a BRRRR. I am looking to also aquire cashflowing assets from the get-go and just buy and hold.

I was thinking about having him be a private lender that simply provides the downpayment for a property and just pay him 8% annually (monthly or quarterly distributions) and but wondering how I would structure it if he wanted his principle out, ie: 5 year commitment minimum, 6 months notice?  Ect?  

Thoughts?