What collateral do cash investors have?

[Patrick Philip]

I am about to start flipping (rehabbing). I am capable of rehabbing one house at a time with my own financing. If I am ever going to do more than 1 at a time, I will need investors.

I suppose I could offer a cash investor 12% APR or something like that. If my plans work out, I will get a few profitable rehabs under my belt, then start looking for cash investors. My question is.... what assurance do these investors have if things don't do as planned? If I can't give them 12% return on their investment, what will happen? Let's say the local market crashes and I can't sell the house for as much as I had planned. What then? Then, I'm in debt to them. I don't think I would give them the house because I would still need to sell it for as much as I could, leaving me with nothing to give the investor.

[Manolo D.]

Patrick Philip You can ask yourself this, will you give me your money and i'll do my first flip, it goes good i'll give you 12%, if it goes down the drain I'll write you a nice sorry letter in a scented paper with whatever is left after all expenses are paid?