Private Invester on a BTL

[PaulA123]

Hi,

I'm looking for ways that I can structure private finance on a BTL property. I understand how and investor would see a flip as attractive as they would have their money in for less time and get it back plus profits earned on it relatively quickly. In a scenario where the investor would essentially provide the deposit and possibly refurb costs, how would repayments etc be structured typically?

Thanks in advance!

Paul

 

[FWL]

Surely you would normally agree to repay any investment +agreed interest after the property has sold? Do they not have to take a degree of risk as well?

 

[PostBrexitInvestor]

So you would be taking a split of the profits/commission in effect?

 

[John Wilson]

Hi Paul.. as FWL said, you'd most commonly just repay investment plus profit share at the end, when the property had sold. Here are a few other options (taken from my blog post about JVs):

• profit share -- when the property is remortgaged or sold then a % of the profit goes to each partner
• equity share -- this method is common if the strategy is buy and hold
• roll up the interest -- and pay it out when the deal is sold / refinanced
• cash flow -- give your partner a share of the monthly cash flow
• monthly interest -- pay your partner a monthly interest rate
• one off fee -- appropriate where your partner is not making an investment of money but instead maybe expertise or the ability to get a mortgage (as a mortgage “host”)
• some other combination of the above.