Equity share and cash flow split deal structure

[Rob Gaukel]

Hello BP community!

I'm working on putting together a proposal for an equity share and cash flow split on a house that I manage.  

I'm located in California, in a college town, and this house is being rented far below market because of deferred maintenance.  I believe the owner has limited resources to invest in the house.

Here's what I'm proposing:

- $70,000 Capital for repairs and on lost rent during repairs

- 7.5% Equity Share Stake in return 

- Estimated increase rent is $2,000 a month after repairs split 75% to me / 25% to the owner

- 5-year guaranteed cash flow.  If the house is sold before the end of five year period the difference in lost cash flow is paid out from the proceeds of the sale

- At the sale of the house the appreciation gained between the imputed value at the time of my investment ($1,000,0000) and the sale price is shared with 7.5% going to me

I'd be borrowing the $70,000 at 5% to 5.25% full amortized due in 5 years.  The cash flow split would cover my debt.  With 2.5% annual appreciation + 5 years of cash flow total annualized return is 10% on the $70,000.

For an owner that does not have the capital or ability to improve the property is this offer attractive enough?  Thoughts on the structure?

Thanks