8unit mobile under contract land only, winning!!!

[Braden Burton]

Patience paid off, we submitted back up offer and got it signed after seller choose different offer. Now have property under contract. 8 unit mobile park being sold off of 16 unit property for 225k. Need to verify new lot line and parcel as well as new taxes as owner is selling off part of bigger property. Lot rent 275 a month, plan on raising to 300 or 325. Separate water and electric for each unit, all underground plumbing replaced in last 10 years. 2 sewer taps, 4 units on each- this is the only thing I could see giving me an issue of blame game if something happens. 7 units occupied with long term tenants, 1 unit needs replaced which we will replace with newer home and sell to new owner/tenant. Property is located in opportunity zone which has great tax benefits. Plan is to raise rents, get 8th unit online and take gross income from current 23100 to 28800 annually, hold for at least 10 years to utilize opportunity zone and then either sell or continue to hold for cash flow. Essentially a 10% cap rate.

I have investor who wants to pay cash for deal and am trying to figure out best way to structure so we both win as I’ll be the operating partner. I almost want to try to get some leverage on the property while putting down 50-70%.

Option 1: get loan from investor and buy property by myself while paying him decent return.. he said he would do this but goal is to build trust and partner on bigger apartment/mobile deal in the future. I think it would be better to have equal ownership in the deal

Option 2: give investor first 30-40% of NOI and then split remaining 50/50 until he is paid back his initial investment then 50/50. I would not make much money for operating but would get 50% equity in the deal.. so if after 10 years he is paid back I would have roughly 125k of equity and 50% of 28k cash flow annually. This only gives investor about a 6% return on money while being mostly passive and taking advantage of opportunity zone and potential forced appreciation by raising ground rent.

Option 3: how would you structure this deal to make it a win win?! Trying to think ahead on taxes and how the deal will make the most sense for both parties.

Any advice much appreciated as I committed first and got this place under contract and now forcing myself to figure out the details. Goal is 40 units in the next 2 years, this would put me at 12. Thanks BP