Taking on Investors Equity Formula


#1

Im looking for help on how much equity to give up to silent partners.

For example

I am looking at a property for sale for 1.3M

They are looking for 260k down on a seller carry. We are going to contribute 100k and our silent partner is going to contribute 160-200k.

We would like to maintain a controlling interest in the property as our partner will be contributing capital only.

Is there a forumla for figuring out what to give out in equity. Do you figure it by Cash Flow ? Any help here is great


#2

RW35,

VIP concept: What are your investors’ and your expectations.

If they are capital only and have no interest in management, that’s one road. A yield is all most passive investors are seeking. They are busy and have no time or patience with HEADACHES from you/asset.

If they want a say in how things are run, that’s another. They (and you) are taking on the risk of the others’ participation.

Make sure they understand how income property is valued and managed. Otherwise, its an uphill battle for the entire time you own the asset.

EVERY
DAMN
DAY

That’s experience talking.

That’s French for saying – if they are newbies in Real Estate income property, you’ll be better off finding other partners.

Just my 2 cents.

Keep us posted,

Mike


#3

if you are looking for partners, let me know stevendsegal@gmail.com


#4

So, Frank and Dave’s fund, and Kevin Bupp’s MHP fund, pay passive accredited investors 8% guaranteed return, paid quarterly, plus 50% of the remaining cashflow and 50% of the proceeds of the sale or refinance. But the risk is diversified across multiple parks, and you’re talking about one park. So, since I don’t know your history, I’d want more like 12%. Depends on your experience and the park’s numbers, though.


#5

I have been paying capital investors either 10% quarterly or 8% with a 25% kicker on profits relative to their investment. I’v been told lately that 10% is more than I need to pay compared to similar investments.


#6

Hi Steven
I own a couple US parks. I am a Canadian citizen. Seeking to take out current Canadian Investors with a seasoned MHP partner on my 145 pad park in Wisconsin with self storage component, Email me back if this may be of interest at your end?

Ken U
250-878-9111
baseoneproperties@gmail.com