How would you structure a win-win deal for a friend/ hard money lender?

[Josiah Sia]

Howdy! My wife and I started this REI game about 5 years ago now. We are only at 4 doors but have been learning a lot about STR and LTR with our own property. Since we have been very successful so far, some of our friends have been taking notice and want to partner up! They have cash on hand that they would like to provide with investing in deals with us.

The deals we are comfortable doing due to our experiences are:
1) Buying and owning a new SFH or MFH (up to 4 doors), paying 20% down (anywhere from 10-30k cash), and LTR or AirBNB listing the 1-4 units.

2) AirBNB arbitrage where we partner with some other RE Investors of ours, pay them regular monthly rent, furnish the place, and then list on AirBNB.

I've never been to great at creating a creative RE financing deal... not really sure where to start. With the 2 examples of what we feel confident in executing above, how could we incorporate our hard money lender and make it worth while for both parties? (We have the experience and the know how, they have the cash)

[Doug Smith]

I read a book "Getting to Yes" by Robert Fisher and William Ury about the art of principled negotiation. In it, it talks about the "Best Alternative to Negotiated Agreement", or BATNA. What is the best hard money rate (flip) or DSCR rate (hold) that you can get out there? What are your friends earning right now on their money and what are their expectations? If you can come up with a number between those two...where you save and they make money, then that sounds like a pretty fair deal to me. If you can do better elsewhere...your BATNA...or they have a better BATNA, then it might not be a good deal for everyone. I wish you luck!