I agree on your statement regarding inflation, however if you are using leverage as outlined then the appreciation is on leveraged funds and should ultimately increase your overall net worth by the 4% as outlined.

Some of my opportunities have been an offering of a pref return plus back-end and other deals similar to the structure you shared above with a capped return.Each opportunity has its own "story" based on the respective deal fundamentals.Since I am working on a totally different deal, but similar deal structure you outlined above, and please know that the following should not be construed as an offering or an open solicitation.With my deal I am very confident in my projections. 

The JV Agreement will outline everyone's rules, rewards, risks, allocations, contingencies, rules for Buy Outs, etc as related to the specific asset transaction.As always, consult your Local Attorney and please DO NOT use a Template JV Agreement.The Banker will use the LLC's cash (which the JV would fund) and then typically requires those holding more than 50% to guarantee the loan.

You should definitely have something in writing outlining how and when the contractor will be paid.

@Jose Aguilar- ask the lender to outline both fha and conv current pricing using same purchase price and down paymnet  and compare ....keep in mind  fha loans have ufmip/ high monthly mtg ins thats permanent

Now, outlining our parameters and narrowing the field, damn MLS.

If you do not want to create a PPM you can create an partnership or LLC for each project with an operating agreement that outlines all the responsibilities of all partners.

@Buyan ThyagarajanI think @James Masotti gave you a pretty good outline for evaluating this area.  

@Dominique Jones Can you outline your Scope of Work for this project so we can see if your rehab budget is accurate?

How many times do you think you can do that before you are "the boy who cried wolf" to all your local contracting companies. you as an investor YOU need to do your do diligence after someone brings you the outline of a good deal even if they have a real estate licence or a contract anything less and you clearly are not a seasoned investor of anything.