I have an older retired aunt who is interested in investing in some of my buy and hold real estate transactions. She is open to terms and expects be to present her some options and opportunities. This will be my first time borrowing from her so I'd love to hear your thoughts on the following:

  • notarized promissory note with all terms
  • 7% interest only payments annually (12-24 months)
  • Balloon Payment at the end of the term
  • No Points
  • Prepayment penalty (I was planning to include this so that it would be a good deal for her and she'd be interested in continuing the relationship)

For Buy and Hold I'm thinking 6-12 month period before I could refi and pay back her principal loan amount. I'm open to all feedback as I've never done this. Also, which part of the deal should I use her money for? Ex. closing costs and down payment while using bank financing for the renovation and acquisition of the property.