I have an opportunity to partner with an established flipper. I will contribute funds for the rehab which constitute approx a third of the total investment of 300K. My investment will be 100K. I can supply 30K and want to use a HML for 70K. I figure this is an excellent way to learn the business and begin to create a rapport and trust with a HML for following flips on my own.
Question: HML expect 1st Lien on the subject property, How can I make this work in a partnership when the partner has paid cash for his 2 thirds?
any suggestions and advice ?
Hi Amra-Faye - You stated that you will "...contribute funds for the rehab" that makes you the construction loan, in essence. So make a proposal to your partners for what you want out of the deal, terms and conditions that you can live with (rate of interest, origination points, equity share %, etc.), including covering the costs to obtain the HML.
Thanks for replying Paul. I intend to do just that, However how do I sell to the partners that the HML may expect first lien on the property in the horrible scenario that we default? Is this too much to expect form the partners holding the title?
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