All Forum Posts by: James Johnson

@Salem VanderStel

Hi Salem,

Your clarification is accurate.  As for the additional questions the answers would primarily depend on the property, but best estimates are below:

No preferred return - We are looking to buy in an area that has 4-8% property value increase YoY, and ideally units which we could comfortably raise rent prices gradually over those years.

Other questions 

Hold period? - Hold period would most likely be between 5-7 year or until we can 1031 into another property

Renovation Budget? - Completely dependent on the property itself, but if we are buying at 50K a door, roughly 5K of a budget.

Please let me know if you need any more information.

Thanks,
Chris

@Will Pritchett - Really appreciate the feedback.  Very helpful!  The loan from friends would allow us to get a commercial mortgage within which we would be funding any renovations similar to a 203K loan.  Our skin in the game would be the time committed to finding deals they would approve, management, repair, collections, etc., but completely understand where investor hesitation could arise.  Although we could continue with our own money as we have, we are hoping to expand quickly over the next 2-4 years and this would be a way catalyze that.

Hi all,

My business partner and I have friends which want to invest with us. We have an idea on how we would structure the ownership on a BRRRR (our idea of the structuring below), but were hoping for advise on how others have structured any private lending ownership. All feedback is welcome!

Our plan for structuring:

• Investor(s) - 25% down payment with 10% emergency fund initially. Investors would be included on LLC as signers.

• As monthly cash flow begins, Chris and I would immediately begin pay back the 10% emergency fund to the investors.

• 15% monthly profit after Opex goes to investors for a steady stream of monthly cash.

Overall ownership structure would follow:

• 35% equity and 15% monthly post-tax CF to investor(s) to give a 66% return if value remains constant.

• 65% equity and 85% monthly post-tax CF (to include emergency fund percentage, etc) to Matt and Chris

Thanks!

Chris

Hi all,

As to abide by all BP rules, I want to emphasize this is not solicitation, but instead simply looking for information.

My business partner and I are looking into somewhat of a set of BRRRRs on a 4-8 top and have been approached by friends with extra capital in order to fund the start of the project. As we are new to private funding, we were trying to figure out the structuring of the deal in order to entice the our investors, but maintain the majority of ownership. Below was the initial thought, but was hoping to hear tried and true structuring as well as agreement documentation if at all possible.

Investor(s) - 25% down payment with 10% emergency fund initially.

My partner and I - Find deals, do maintenance/rehab, find tenants, collections, etc.

As monthly cash flow begins, pay back the 10% emergency fund to the investors.

5% monthly profit after Opex goes to investors in order to see some monthly cash

Overall ownership

- 35% equity and 5% monthly post-tax CF to investor(s) to give a 66% return if value remains constant

- 65% equity and 95% monthly post-tax CF (to include emergency fund percentage, etc) to my partner and I

Would love to hear any and all thoughts on the matter!