Private money investor wants to move forward..technical questions
So after about 2 years of educating myself on BP on the forums and with all the amazing articles, guides, and podcasts, I'm finally to the point of taking action. I found a friend/partner who is also motivated. Another friend of mine is interested in partnering as a private money lender. He is willing to fund 100% property purchase and rehab costs to start and see how it goes. I'm still trying to figure out how to structure the deal. The first project we're looking at is a flip.
1. Once the structure is determined (straight APR interest for a fixed term or that plus share of profits), what kind of legal documentation is required? Does an attorney need to draft some type of agreement? For straight interest would it just be a promissory note?
2. Should there be one agreement or one structure per property deal? My other partner brought up the possibility of funding the flip, rehabbing, selling, and using that money to fund other projects while the agreed upon term of the private money deal is run out. But this seems complicated and tricky to me. Better to just do one loan per deal, sell the property, pay back investor's principle, and hopefully take some profits.
3. Once the lender agrees, where should the funds be transferred to? We don't have an LLC set up yet, and just have our personal banking accounts. Should my non-lender partner and I set up a new bank account in both our names or since we all know each other, and as long as we have some type of legal agreement document, it really doesn't matter where the money sits?
Thanks and I'll keep BP posted if the project looks good and we move forward.