Having an investor on your side to help you start

[Blake Hrabal]

Ive been saving up to purchase my first primary residence while writing my business plan and educating myself on rental property investing.

Today someone close to me said their interested in investing in me. The first thing I thought is REI and using the opportunity to get a proactive start. This person also is a GC and has tons of construction experience and knowledge, someone you would want on your team.

I was going to buy my primary residence then save up another down payment for my first investment property. But I see an outlet to get started sooner with having an investor.

He's willing to put up anywhere between 10-50k.

He would be silent partner, offering money and consulting on homes.

I'm not sure which steps to take to use the investment to make us both money in the long run.

Would you still target rental properties if you have an investor to help you get a start? Or would you fix and flip? Or BRRRR?

How would you get started Real Estate Investing if you had someone tell you they would give you 10-50k to get started depending on the route you took?

What type of structure would you set in place for you and the new investor as far as payback for them etc?

[Evan Polaski]

Congratulations!!  Knowing someone sees your potential can be a powerful tool.

Having done both BRRR single families and fix and flips, as well as an AirBnb, my personal opinion is to go the fix and flip route. Many on here have started with single family rentals, and while I still have a handful, they are not all they are cracked up to be. I bought mine in the recession, so got steals, and was able to pull all my cash and then some out with the BRRR model. But, in this hot market, I do not see the opportunities as much. And with our flips, we are only making about 15-25% of our investment total investment as profit. So, at best, I cannot get all my cash out on a refi, as you will likely be capped at 75% LTV, and there are fees involved.

As to how you can structure it, it can be done a million ways.  Whatever is agreeable to both parties.  I take the approach that learning is worth something, so don't get greedy and try to take more than necessary.  On flips, we did 50/50 split of profits after all costs are covered.  And that is 50 to the "equity piece" and 50 to the "management piece".  Since we had some of our own equity in it, on top of management, we got prorata of equity piece too.

On BRRR, if you are managing, make sure that is covered, either through a cost to property before profit share, or a larger stake in profit, as you will be working.

Hope this helps.  Again, it is great that someone sees your potential as you are just getting started.