Here’s the situation:Key Project Details:•Property Size (pre-renovation): 250 sq. meters (2500 sq. feet)•Purchase Price: 250,000 EUR (1,000 EUR/sq. meter)•Renovation Costs: 750 EUR/sq. meter (includes kitchen, appliances, quality furnishings)• Loan costs (during renovation and renting): 350 sq. meters (due to attic expansion)•Property Size (post-renovation): 350 sq. meters (due to attic expansion)•Post-Renovation Layout: 2 separate apartments•Airbnb Income (24 months): 2,500 EUR/month/apartment (= 5,000 EUR/month)• Other running costs: 600 EUR/month•Projected Sale Price (after 2-3 years): 850,000 EUR (approx. 2,500 EUR/sq. meter)•Closing Costs: Negligible in Tbilisi•Real Estate Agent’s Fee: Typically 3%, but negotiable based on who hires themFinancing Setup:•Property Purchase Financing: 100% bank financing at 5.9% interest (bank has even financed 150% to cover some renovation costs in the past)•Renovation Financing: Our friend is offering to finance 250,000 EUR in cash for the renovationsProposed Partnership Structure:•Work Involved (on our side): Full renovation (10-12 months to complete), furnishing, and property management through Airbnb until the sale (2-3 years)•Profit Split Proposal: 60% (us) / 40% (friend providing renovation financing)Questions for the Community:1.Does the proposed profit split (60/40) seem fair, given the work we would handle (renovation, furnishing, property management)?

To overcome these challenges, many borrowers focus on building strong communication with lenders, providing clear and detailed exit strategies, and ensuring thorough due diligence on the property.

Thanks everyone for your details, very informative!

I am not an attorney and I do not want to provide specific details in a public forum.

Of course, please consult with a tax professional for more details.

So project selection, detailed comp analysis, detailed cost analysis, an ARV based on fact. 

Guy was getting a hard money loan for property and construction (don't know the details of the loan) only that the bid was accepted in FEB and the lender totally dragged his feet until it finally closed in August. 

We make detailed P&L's for each property and then an LLC bucket with all relevant expenses. 

I did an entire analysis of the like units that come before mine.

Part of the appraisal is an income analysis, but the appraiser still has to reconcile the income approach with the other two approaches to value (cost and sales comparison).