Silent Investor Splits

[Jessica Sarantakis]

Clearly every deal is different but for Flips what would a good equity split be with a partner who brings all of the capital. They would be a passive investor.

Would it be just an equity split or equity plus a preferred return? 

This would be a new partnership.

Thank you!

[Kyle J.]

@Jessica Sarantakis If you guys want to be partners, it could be whatever you guys both agree to and think would be fair. Keep in mind that if your partner is going to be an equity partner and share in the potential profits, they also run the risk of incurring potential losses should the deal end up going that way.

A simpler way to do (and often a better way for the partner who truly wants to just be a passive investor), is for them to just act as a private lender/debt investor on the deal and loan you the money for a fixed return.

There’s no right or wrong way to do it. It’s just whatever you guys agree to and think is best for each of you and your situation.