What is Equity Partner?
An equity partner is similar to a debt partner but rather than looking for a specific interest rate as a return on their investment, they are interested in a share of the cash flow and the appreciation. Since equity partners are interested in the cash flow they are looking for a minimum of 6-9% cash on cash return going into any deal. Equity partners will also be paid monthly or quarterly based on their percentage and cash flow of the
property.
Our Equity Partners
Best structure for holding over a long period of time. Both flipping and holding are possible with it. Income is produced from two sources: the first is the monthly cash flow, and we typically pay quarterly. Another comes from the appreciation. For the buy-and-hold, we will show them the historical number of the property, if it hasn’t rented, and what rental market comparison we have. This will help us understand what kind of income the property might produce and what kind of expenses it will have. We split cash flow and appreciation with equity partners. Cash flow payments can be made either monthly or quarterly, but we choose to make them quarterly to make things simpler.
Benefits of our Equity Partners
Access to Capital: One of the primary benefits of having equity partners is that they can provide a significant amount of capital to a business. This can help fund growth, expansion, and other strategic initiatives.
Expertise and Networks: Equity partners often have a wealth of knowledge, skills, and industry contacts that can benefit the business. They can bring new ideas, insights, and perspectives to the table, and they can help open doors and create new opportunities.
Shared Risk: Because equity partners share in the ownership and profits of the business, they also share in the risks. This can help align their interests with those of the business and encourage them to work collaboratively towards shared goals.
Long-Term Commitment: Equity partners typically have a long-term commitment to the business, which can provide stability and continuity. They are invested in the success of the business and are motivated to see it grow and thrive over the long term.
Reduced Debt: Unlike traditional debt financing, equity financing does not require regular interest or principal payments. This can help reduce the financial burden on the business and provide more flexibility in managing cash flow.