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Updated over 6 years ago, 07/21/2018
Private money finances 25% and gets equity
I am considering a financing arrangement and would like thoughts on whether this makes sense.
I have identified an apartment complex that will have slight + cash flow with conservative expense/revenue estimates and 100% financing.
I have an investor partner who will finance 25% at market or slightly below market rate on an 8 year am. 75% will be financed via conventional commercial financing, 20 year am. with 5 year balloon.
In return for providing all of the "come up money", the partner would receive 25% ownership stake and, as I mentioned, be paid back with interest. Partner would be largely silent and does not want to participate in management.
Is this too generous, or is this a reasonable offer since I will not have to come up with anything up front?