Question About Private Money Contracts

2 Replies

I’m partnering with a friend on a flip, and he is going to be providing me a private money loan. Has anyone had a good experience with a private money contract? If so, where did you find it?

Hey @Tyler Mundy .  That's great that your friend is willing to provide the funds for your flip.  To protect both of your investments (and your friendship), you'll definitely want to make sure you have the proper paperwork to make sure the loan is done legally and that all possible contingencies are covered.  I know you'd never plan on intentionally paying him late, or defaulting on the loan, and you hope the house would never burn down and you'd find out too late that you had the wrong insurance, but it all happens.  So it's better to have everything done properly up front so that if/when something happens, you each can just refer to your paperwork and know exactly how to proceed. 

With that being said, you don't just "find" the "private money contract".  And it's not just one contract that you'll need.  It's multiple documents and it'll depend somewhat on the state that the loan is being originated in.   (Whatever you do, don't just get your forms off the internet, though you'll find plenty of them.)

I could write more, but honestly there's a post already on here with a response from an experienced lender that does a better job of listing most of these documents, where to get them, and who usually pays for them. So I'll just refer you to that post: https://www.biggerpockets.com/forums/49/topics/413352-private-lender---forms-required