I bought a house using a personal loan. My partner and I flipped it and sold it. We are splitting the profits but he said that I can’t get the money I paid for the house using the personal loan plus the monthly payments I made for the personal loan. I know the case is different when it is a mortgage loan but this was a personal loan. Should I get the money I paid for the house plus the monthly payments made? Thanks
Investor · Charlottesville Virginia · Member since 2021 · 348 posts · 346 votes
3y
First, I will say that this certainly should have been written in a legal agreement between you and your partner before any money was spent so that everything is 100% clear.
That being said, yes. Interest on a personal loan should be viewed as an expense, typically referred to as carrying costs. Profit = Sale price - purchase price - rehab costs - carrying costs (loan interest, utilities, etc.) - sale commission. Then you split the profits.
Investor · Charlottesville Virginia · Member since 2021 · 348 posts · 346 votes
3y
First, I will say that this certainly should have been written in a legal agreement between you and your partner before any money was spent so that everything is 100% clear.
That being said, yes. Interest on a personal loan should be viewed as an expense, typically referred to as carrying costs. Profit = Sale price - purchase price - rehab costs - carrying costs (loan interest, utilities, etc.) - sale commission. Then you split the profits.
I bought a house using a personal loan. My partner and I flipped it and sold it. We are splitting the profits but he said that I can’t get the money I paid for the house using the personal loan plus the monthly payments I made for the personal loan. I know the case is different when it is a mortgage loan but this was a personal loan. Should I get the money I paid for the house plus the monthly payments made? Thanks
First, I will say that this certainly should have been written in a legal agreement between you and your partner before any money was spent so that everything is 100% clear.
That being said, yes. Interest on a personal loan should be viewed as an expense, typically referred to as carrying costs. Profit = Sale price - purchase price - rehab costs - carrying costs (loan interest, utilities, etc.) - sale commission. Then you split the profits.
Thanks Mr Martin. To be clear, if I paid 30k for the house using the personal loan and paid 1154 monthly for the personal loan for 10 months, should I get the $11540 plus the amount I paid for the house? Thanks