ROI Investment for Capital

[Jason Kaufman]

I have a family member who might be willing to invest capital I need for leverage. While he is a family member he is treating this like a true business opportunity. I want to get creative on his ROI instead of a flat 8-10% return. My strategy is a combination of fix & flip but ideally looking at long-term rentals. Trying to come up with an attractive offer that will benefit both parties. The investment would be around 100k. Any information would be greatly appreciated. Thank you.

[Brian Gibbons]

@Account Closed

This is MY opinion and MY Modus Operandi (M.O) only.

IMHO there are 2 different mind sets and attitudes for JV Partners.

I want someone to have the credit to leverage a loan, buy a rehab, fund the rehab, pay all costs including holding and selling costs, and earn a profit of 10% to 15% on their money in 6 months, not split the net pretax profit.

I want this person to be a busy doctor or dentist, I want him - her to have too much money and no time, not a REIA attendeee.

I want this person to be more concerned about their % profit and not learn REI.

Example:

Retail Comps after rehab - $120,000.

Costs to buy: <$45K>

cost to rehab: <$15K>

Holding costs: <$10K>

Sales Costs: <$10K>

---------------------------------

Gross Profit = $40,000

$80K used x .15 = $12,000 within 6 months (30% APR)

JV Partner gets $12K plus all his money $80K back.

I get $120K - $80K - $12K = $28K Gross Profit.

If I split it 50 50 I would make $120K - $80K costs = $40K div 2 = $20K.

For 6 months of my time I would rather it my way.

Always give a percentage like 15% for 6 months use of the money, never 50 50 split.

IMHO.

And, have the JV Partner buy it and own it until it sells, and you have an option to buy half the equity for $1. Place those terms in the LLC's Articles of Incorporation.