Thanks for the interest and great challenge.

More background: my PM isn't interested in managing the properties as a contracted PM, because the return on per hour is just too low given these neighborhood levels. But, yes, he's a licensed broker and will contribute both discounts on the deals and contribute his fees on sale. He will also project manage the renovations, and has a crew - if I tried to do that on my own it would take twice as long and im sure cost 20% more, as I dont have the networks with the contractors and local planning guys.

My numbers, for your own analysis:

Base case assumptions. Cost to aquire and renovate $30k out of pocket plus contributed fees from partner. ARV $50k, probable appreciation over 5 yrs of 50 to 100%. Taxes and insurance $1900/yr. 10% vacancy rate. Maintenance $1000 /yr, plus establish in 1st year a capital account of $5k as a buffer for longer term capital items. Normal pm fees, if available, around 1.5 x rent / yr. Rent $800/mth.

(Here I'll assume no real increases in rent, T&I, maintenance, and also ignore inflation. But net of inflation I've used a wacc of 7%, my baseline portfolio estimate for the stash growth going forward pretax.)

Net revenue initially is around $5740/yr, giving a cash on cash return of 19%, but dropping to 8% once the loan is paid off in around year 6 to $2270 per year. Average coc over the first 10 yrs is 14%.

Assuming a sale in year 10, with 50/50 split, of 60k, minimal appreciation, of that cashflow, and I get a year zero NPV of $16400.

By my way of doing economics, that's a net return/investment ratio of 55%. (With zero increase in house value return investment ratio would still be 29%, btw)

Return for the partner is huge of course, if the property performs. They'll earn it! Im ok with that. For partner 1 it's a pretty passive with no sale, and those pretty conservative numbers, indeed, it ends up a poor 8% return cash on cash, which is still not a disaster. But by then you've recovered your capital, so its gravy anyway.