Structuring BRRRR Deals With Investors

[Chris Heinmiller]

Hello BP,

I'm currently trying to find/ set up my first BRRRR deal and need a bit of guidance. Although I will be putting some of my own money down on the deal, the majority of the deal will be funded by investors. I have a decent number of potential private investment options (I believe), but I'd like to get past the "Hey do you want to do a real estate deal with me" stage and into the details to determine who's actually serious and on board. This is further complicated by the fact that generally speaking, there's little available inventory, making it necessary to find motivated sellers by direct mail and other means. It's tough to get an investor fully on board when you don't have a specific deal to walk them through, but the market is so hot that if you find a deal first, you could lose it if you don't get investors on board soon enough. So my first question is, "what comes first? The investor or the deal?"

My second question is more specific to structuring the deal: When working with investors, what are the terms of your agreement, generally speaking? Do you offer a specific return (i.e. 11% or so) on their money? When/ how do you pay them out? To me, it seems like the best way, should your investor allow it and if the numbers make sense, is that you determine a specific ROI percentage for the investor's investment and try to pay the majority of that (if not all of it) when you do the refinance, then you keep the property for yourself and make your money from cash flow, appreciation, etc.

I understand the actual BRRRR process, just trying to understand the steps leading up to the process.

Thanks,
Chris