Returning Principle to funding partner/private money lender

[Jacob Thorp]

Hello,

I am trying to research how to structure an agreement with a funding partner. I have found some great resources (https://www.biggerpockets.com/blog/2015/12/03/structuring-partnership-rental-properties/) but none of them discuss returning principle to the lender.

Example:

Managing partner A (me) and funding partner B (them) decide to go in on a multifamily.

$200,000 property 20% down + $10,000 rehab

Funding partner funds all $50,000.

Profits are split 50/50 (monthly cash flow / profits on a sale/refinance)

Sounds simple enough however how do you determine when to sell/refinance? When can you pay out the investor? Can the funding partner tell me he wants his capital, how would I get it out of the property if there isn't enough equity?

What are the common ways to repay private investors their principle? I appreciate any advise! Thank you.