splitting payments w/ investor- what's fair? - Posted by Robin AZ

import · February 23, 2001, 9:52am

Posted by Don (Fl) on February 23, 2001 at 16:13:10:

I am in a similar situation as you. I have an investor who only wants to put up the money and absolutely no other involvement. We worked out a plan that he funds the purchase, rehab (if any) and carrying costs (if any). Then upon the sale I get the down payment and he “buys” a partial from me for a price that yields him 30% per annum. For example:

Purchase, rehab and carrying costs $3,500

Sales Price $7,000
Down Payment $1,000
Loan Amount $6,000
Term 3 years
Interest 13%
Pmt $202.16

The investor buys a partial of my new note for $4,131 and receives $175.37 per month for 36 months which yields him an attractive 30%.

I receive $1,611 in cash (down payment plus the difference between the note sale and the purchase price). Plus I get $26.79 for 36 months. I am responsible for buying, rehabbing, selling and managing the notes. He gets 30% yield low risk for putting up the money.

It works for us!

Good Luck,

Don

import · February 23, 2001, 9:52am

splitting payments w/ investor- what’s fair? - Posted by Robin AZ

Posted by Robin AZ on February 23, 2001 at 10:52:59:

A friend of mine is putting up the money, and I’ll be doing the work to find the deals. She asked me what was fair for splitting the profits. I said I’d give it some thought-- I really don’t know. Any suggestions?

One posibility is giving her the down and whatever payments until she gets her investment back, and then splitting the remaining payments (what would be an equitable split?). Or, giving her the down and splitting all of the payments in some fair way.

I’d appreciate the input. I’ve devoured both of Lonnie’s books, have gone to a bunch of parks, talked to a few PM’s (why is that soooo intimidating???). I am so excited to get started!!

Thanks!
Robin AZ
R_L_Dugas@yahoo.com