Utilizing Private Money
Good Morning,
I was wondering if anyone would be willing to share their experience and terms of private money loans. I recently had a family member interested in lending me private money, however having never gone this route before, we are quite lost on how to structure the terms of the loan, dollar amount, interest rates, repayment schedule etc. I know when utilizing private money, there is so much flexibility , what are the "standards"?
If you're considering borrowing money from a family member, it's important to treat the arrangement as a formal loan. This means that you should put the terms of the loan in writing and agree on a repayment schedule, interest rate, and any other details before proceeding. It's important to do this to avoid misunderstandings and to protect both you and the person lending you the money.
One way to determine the terms of a private money loan is to look at the terms of a similar loan from a traditional lender. This can give you an idea of what is standard in the market. For example, you could look at the terms of a traditional mortgage loan and use that as a starting point for your private loan. Then you could look at the terms of a hard money lender.
Another thing to consider is the relationship between you and the person lending you the money. If you're dealing with a family member or friend, you may want to be more flexible with the terms of the loan to avoid causing any tension in the relationship. However, it's still important to have a clear understanding of the terms of the loan so that both parties are protected.