80,000k profit on 200,000k loan

[Daljeet S.]

Hello,

This is my first post on this forum. I have been an investor since 2009, with 2 rental properties, a condo Downtown, Toronto (under construction) and 2 acres of land. I am looking to fund a loan for a development company owned partly by my brother, who is offering 80k return on a 200k investment after 2 years. 

Is this a good deal? What other way can I use this 200k (which I am pulling out as a LOC on my existing properties and paying 3.2% interest), to use in buying or buying/renovating/flipping multiple properties on a full-time basis in the states?

Thank you.

[Jonathan Orr]

@Daljeet S. that is a 40% return and a 18% annualized return over 2 years.  

With the limited info it really depends on what kind of return you are looking for and if you can be without that money for 2 years.

Is this payment overtime or an equity stake that you will receive your return at the end of 2 years?  Will you be cashing out completely (meaning that you get your 200k + 80k at the end of 2 years or just the 80k and the initial equity stays in longer?

Being a developer myself I think that is a ok return on a development, however it really depends on what you want in an investment.  

I know some people that would do that deal all day long.  However I know some that want more flexibility or a fast return.

With that money you can use it to buy and flip but the reason why investors don't do that is that it requires alot of work during that time period you are flipping.  If you want to be a passive investor and let the money work itself then I think this development opportunity is the way to go.

If you don't mind the work and have a game plan in flipping then you may be able to make a better return a little faster but time = money and  you have to decide is your time worth flipping houses or other things?

What type of development is it?