Family Member Loaning Money for BRRRR Deal

[Matt Harris]

I have a duplex picked out that need some work. I also have a family member that is eager to lend some money and get in on some real estate investing. I wanted to get some opinions on the best way to go about paying the family member back to make it fair for both parties as well as making sure I give them a fair return on their investment.

I believe I can buy this duplex for around $80k. (I'm from a very rural area where we can still find some reasonably priced real estate) With about $20k of rehabbing I can make this duplex worth around $150k, or more, based on others in the area. I have about $60k in reserves right now and would need to borrow the other $40k. I would be doing the rehabbing myself, besides a few small electrical and plumbing jobs that i would hire out. The rehab should take about 2-3 months.

If anyone could give me some pointers on what a fair return for the family member would be? If anyone has some examples of deals they've done like this I would love to hear about them!