I’ve heard about this style of partnership on the podcast, in much more sophisticated deals like syndications.

But the main purpose of delineating cap rates here, is to understand the meaning of NOI in the creation and assessment of value for an income producing project.Remember: when speaking with sophisticated investors, knowledge of these ratios and the ability to work them and speak them, will set you apart from the rest of the market.Here is a sample proforma:Proforma Income and Expense Summary Construction Cash Flow AnalysisInternal Rate of Return Analysis

However, you do need to be a sophisticated investor.  

I was not a savvy investor when I started and I basically looked at a dozen properties and picked me "favorite" that didn't include any sophisticated analysis.

This is why IRR is used by sophisticated and institutional level investors.Understand this: the longer an investment takes timewise, the more likely the total IRR will be lower and trend downward.

A more sophisticated approach that you might want to use in the future is to set up an LLC in the state where the property is located but have the LLC owned by a parent company located offshore.

Also for the gap lender to make 125 a month on a second position 100% finance quite frankly is pretty risky and I suspect most that do this are newer not sophisticated investors.. 

The less sophisticated comments tend to focus on either return maximization or risk aversion, only.

Then, if the property seems to be making sense, you can move on to the more sophisticated analysis tools.  

While Zylstra said the plan is common in the tech industry, where constant acceleration and sophistication means investing in employees is key, it can only benefit Arizonans.