The Equity Partner

Here’s another funding option:

Suppose you found what looks like a great deal. You don't have the cash (or don't necessarily want to spend yours) to do the deal. What are your options? You can go to a Hard Money lender (see our tip on that here). You can do a Private Money Loan, which is like a hard money loan but from an individual rather than a corporate entity. OR - you can recruit an Equity Partner. This person puts up the money for the project and you split the profit, normally 50-50.

This person is NOT going to be a total stranger. It will be someone, friend or family, who knows you and has confidence in your ability to complete the project. That confidence includes an expectation of a return on the investment that exceeds what they could make putting their money elsewhere. When recruiting a partner, it is important for you to have a firm grasp on the numbers, the time frame, and the expected ROI which, when divided, will be an excellent return for your partner.

Seal the deal with a Joint Venture agreement or form a new LLC with your partner.

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