Equity partner ROI on flips

[Taylor Green]

Hi,

I was wondering what types of returns investors are getting as completely passive equity partners for fix and flip investors.

I'm guessing the money partner should be getting higher returns than just lending on a property because they are taking on more risk. However, I am not sure.

I was just curious to see what types of returns fix and flippers are getting for their money partner.

Thanks in advance for the input.

[J Scott]

We don't often take on equity partners, but when we do, this is math we discuss:

We target deals where the absolute return is at least 15%. Our average hold time (purchase to close) is generally about 4 months. Our partners fund 100% of the purchase + rehab and get 50% of the profits.

Using those numbers, a typical return can be calculated as 50% of 15% over 4 months, or about 22.5% annualized return. Doesn't always work out to those numbers, but that's our targets and averages.

You can substitute your own numbers into that formula and determine what your partner's return would be...