Private Investor Wants 50% for 0% work Advice

[Tom R.]

OK, here is the situation I'd like some creative financing / deal structure ideas please.

I have a deal/property & I approached a private investor friend with:

I originally structured the deal to him as a 'debt' only investments:

• IE: Investor put in 100% and received 10% interest over 18 months. 
•   After 18 months I refinance, pay investor 100% of capital.
• I keep property and we 'lather, rinse, repeat' another property.

 I was planning on vetting property, managing rehab, managing property mgt, managing finances (payouts, etc) managing LLC (asset protection strategy), etc., etc., etc. :)

However!!!! He has a change of mind and now wants the following:

• 50/50 investment (he pays half, I pay half)
• 50/50 ownership
• 50/50 cash-on-cash rent pay outs.
• He wants NO management or ongoing responsibilities.
• IE - I do property vetting, mgt of rehab, mgt property, mgt finances, mgt llc, etc.

My question to all of you very smart & creative financial folks is this:

How can I structure this deal that make more sense for both of us. He is holding strong on him doing NOTHING other than provide 50% of the upfront cash while wanting 50% of the assets.

As a side note, he (my friend) is sitting on a huge pile of liquid assets to use towards "investing".
I know he is very nervous going into REI, but if we pull this off and he feels comfortable I know we can take down many more properties. So I really want to try and make this work for the upside of future deals.

Thank you so much for reading my post and I look forward to your replies.

P.S. Yes, the numbers are solid and the SF property will be +CashFlow, etc

[Jay Hinrichs]

Well Tom I am going to take the other side of the argument here.. If you have no capital then what worth are you... plenty of people with money can simply do this on their own what value do you bring.. this attitude that you do all the work and the money should take less is what keeps many from ever doing ANYTHING>.. when in fact what you should do is jump at it just so you can get started.. other wise you will waste a ton of time looking for that fairy god father investor who is just begging someone with little to no capital no real experience and willing to ONLY take 10% on their money.

these folks could go into REITS Crowdfunding DEALS HML short term.. many other investment that would be safer than doing a deal with you for a measly 10% return... that is wishful thinking and very short sided ... I see it all the time... thinking your value far exceeds what it really is.

this is not rocket science buying and managing a rental.. there is no real skill to it.. its as easy of a RE transaction as you can do.

So that would be my counter point and devils advocate to all the people above who took your position of your bringing more value than the money   @Diane G.