I want to let investors invest as silent partners.
I want to form a company that let’s people I know invest. I then can buy homes to flip or rent. The amounts would differ on their end and mine but I would be the one doing the work they are just investors. What is a typical structure for this in terms of profits?
Thanks for your question! Typically, friend and family investors are paid between 6% and 20% with a 12-24 month loan term. They can be equity or debt investors. Borrowers typically will finance up to 65% of the loan-to-cost from friends and family, using 35% of their own funds.
If you have friends or family invest, it’s critical to let them know the risks involved. Make sure the entire deal structure, including when they can expect to be repaid and at what rate, is in writing.
You might also consider real estate crowdfunding platforms like Patch of Land or Groundbreaker. There are several other real estate crowdfunding platforms as well, but some are restricted to accredited investors.
Hope this helps!