Mechanics of receiving Private Lending funds
BP community,
I have found a person who is willing to do private lending for my first fix and flip. The individual is going to fund 100% of the purchase. From there I'll be funding the rehab. We have already negotiated percentage and terms including signing a promissory note and having the lender be first lien position on the SFR property.
The property is an REO. At this time I would not be able to show enough liquidity (proof of funds) until my private lender funds me.
I do have an LLC setup that I use for consulting and would be able to run everything through that entity. I have not set up an REI entity up at this point.
I want to ensure, I protect my lender, myself, and the deal.
If anyone can share the process/mechanics of the actual funding process including:
1) Does private lender fund the project ahead of closing?
2) In the Contract with Seller if they ask for proof of funds, how do you show that?
3) Is it easier simply to have both parties (private lender and myself go on the contract)?
Any guidance, process, and/or insight would be greatly appreciated!