Private money and hard money investing

[Korey Scott]

Hello, 

I am thinking of asking friends and family to fund the down payments for hard money loans. They would do 10% of the total loan as the down payment. I would then get the money through the hard money lender, rehab and refinance the property. Then I would give the down payment back to my investor plus the interest rate we decide on. After that the have they option to retain 10% equity in the deal as a limited partner. They would receive 10% of the cash flow and 10% of the profit when we sell. 

This may not be a new idea, but i just wanted to get some advice. Obviously this would eat at the cash flow, but i figure if i can keep reinvesting their initial capital I could purchase so many more properties than on my own. I could even faze out investors all together once i build enough capital.