I’ve always been interested in diversifying outside of the market with real estate, but never had an interest in managing properties. I’ve always asked my landlord/friend to keep me in mind with opportunities. He’s proposed we purchase a 12 unit property, but I would be the putting down the majority of the down payment ~70% on a 20 year mortgage and I’d be repaid using a ‘15/50/50’ method such that I receive I assume an additional 15% of total monthly income until the difference is accounted for. This is projected to take a little more than 7 years and then after that everything is split 50/50 including profits made on thé sale of the building. Of note, he’ll also be providing property management and we’d split all expenses. I know this only scratches the surface, but from 1000 feet does this sound standard?
((Im still trying to wrap my head around the numbers (vs a typical market return) which I’m happy to provide It seems like the worthiness of an investment like this very much depends on the actual property value in 20 years as the cash flow provided will not come close to returns in an index fund earning 6% over that time frame. Given the nature of this housing market I tend to think the appreciation on this particular property will not match the 4% growth our area has experienced over the last 20 years.))
((Im still trying to wrap my head around the numbers (vs a typical market return) which I’m happy to provide It seems like the worthiness of an investment like this very much depends on the actual property value in 20 years as the cash flow provided will not come close to returns in an index fund earning 6% over that time frame. Given the nature of this housing market I tend to think the appreciation on this particular property will not match the 4% growth our area has experienced over the last 20 years.))