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Updated almost 4 years ago,
Fair Investor Percentage
I have purchased two rental properties with other partners where we all invest the same amount of money and split the deal accordingly. I have an opportunity to invest in a 12 unit with two other guys that found the deal. They want me to come up with all of the money to fund the down payment and rehab costs using my business line or credit. The rental property will pay for the interest every month for the LOC for 12 months. At that time the plan is to refinance with the rent corrections and added value like a new roof, siding, interior work etc. I have the details in the following link.
https://dealcheck.io/s/-MSxivN...
The deal right now is that I get a 1/3 of the deal and the other two guys 1/3 each. Is this normal? I would only realize a third of the return. Is this that good of a deal for them to own 2/3 and have no money to put in? I used the yearly rents x 9.5 to come up with the value of $950,000 after one year when the rents are corrected and the building is fixed up. At that evaluation the amount I get back after refinancing is short $40,000 on my LOC. Their response to this was that they will find another deal to pay for the short fall. A sort of leap-of-faith. What would be a fair percentage for me?