How to Structure a 1st Home Conversion + Co-Investment?

[Christopher Erwin]

Seeking advice for a friend --> His bro just bought a 2nd home, and he's talking to his bro about keeping his 1st home and converting it to a rental property. My friend would like to invest in the 1st home.

How Would You *Simply* Structure It?

My Thoughts:

• Make it a hybrid debt / equity vehicle
• Provide XX capital upfront, which entitles him to:
  • XX% of NOI (and mutually agree to definition)
  • XX% of sale proceeds after mortgage paid off
• For any major capital calls (new roof, siding, etc), contribute XX%
• Original property owner keeps name on title and mortgage (no change)
• No 2nd lien on property

NOTE: It's like a note investment, but because there's unlimited upside since it's % based and not capped, the increased risk that comes with it is that there's no asset-based guarantee via a 2nd lien.