Advice on equity on 4-family that can be refurbed + sold or rented

[Scott L.]

Hi, I'd greatly appreciate any input on this deal. I'm fairly familiar with the terms I'd seek for a local (NYC suburb) single-family flip, but this 4-family has possibilities to flip or rent. The CAP and ROI seem attractive, but am I giving up too much in terms of the returns given my equity position??

• 4-family home.
• Purchasable for $310K, significant refurb needed (say $135K).
• Finance acquisition 70% through hard money loan, 30% through equity. **90% of the equity would be my contribution here.
• End-game possibilities to (a) put on the market to sell after 4 months refurb – could be worth $575K ARV and if sold quickly yield me a 30%+ cash on cash return, or (b) if soft buyer's market then put out to rent, with projected 9% cap rate.

My main questions:

• If I put in 90% of equity, what % of profits would be competitive? Maybe 50, 60 , 70%??
• Have folks out there arranged an LLC structure where the small equity holder (the developer) makes a higher % if it's sold quickly but the large investor (me) makes more if it's rented out for years? Or does this complicate incentives

Thanks for any thoughts, Team-BP.

Scott