Evaluating Private Money for Fix-and-Flip Deals

Member since 2015 · 86 posts · 44 votes

For those who regularly use private money on fix-and-flip projects, what terms or structures have you found most investor-friendly? I’m curious how others evaluate risk, timelines, and communication when working with capital partners.

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Michael Wyatt
Lender · Boston, MA · Member since 2021 · 125 posts · 64 votes
9mo
For you, the cheapest and least security. For them, the highest return and most security. Most are going to fall 8-12% return, with a lien/promissory note, maybe added as additionally insured, maybe cross collateral requested. I've had folks lend me money with just a note and no lien. Have done flat rate of return, equity splits, etc. It really depends on what everyone is comfortable with. Everything is up for negotiation. A lot of the time private money isn't cheaper it's just easier to work with.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9mo
Nothing about lending is investor friendly. Investor loan agreements are written to protect the lender. While the borrowers have rights, the default provisions are very much weighted toward the lender with default interest, late fees and other provisions.
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