Note investors - how do you structure your joint ventures?

[Jamie Bateman]

Do you always do a 50/50 split? Do you consider a lesser split (for your side) for performing notes, since there should be less to manage?

When you send payments to your JV, do you include principal and interest? Or do you include interest only, saving the return of principal until the deal closes?

[Bob Malecki]

I provide a 50% split on interest income and any capital gains. We issue quarterly distributions of entire principal and 50% of interest for the quarter. We use a personal property trust with each partner as beneficiaries and the note is assigned to the trust. I usually keep $1-2K for reserves on performing debt and $5K for non performing debt. Here is a simple diagram: