What options does private money investor have to make money?

Question

I have a friend who is interested in investing in my second rental property. My question is assuming he loans me 30k in a 100k property, what options does he have to actually make money?

Treat it like a mortgage and pay him PI until I can do a cash out REFI? Do most investors do these kind of loans for short term? 3-5 years or standard 30 year amortization? What is the average rate I should be charged to be fair.

Pay him flat fee for the loan of 30k that has to be paid back within12-18 months?

He has never done this sort of investing before so I want to make sure it's good for both of us.

How would the deal be structured if he actually invested in the project if it were a long term buy and hold rental?

I searched private money on the forums but i could only find information on how to find private money, etc...

Any advice is appreciated. I'm basically looking at options he has as investor.

Thanks,

Tyler

Tyler Caruso · Answer

and if he were to partner how would one share in the write offs? Would that only be able to be done if it were placed in an LLC or could him and I still use the against or personal incomes? Just split the write offs as well?

Tyler Caruso · Answer

I'm also most interest in a loan format to keep it cleaner for now. I'm still using my first rental house as a personal write off since it was my old primary residence, I don't have an LLC or anything yet.

If it were a loan, what is the going rate and term for something like that?

Levi T. · Answer

If he is willing to co-sign on the loan, as the bank will require it if he owns more than 10% of the LP, just split off 30%, 50%, whatever you agree on. Personally I would go with a loan from him and pay him a flat interest only, then when you can refi and pay him off, do so. He will be happy, and you can offer him the same deal on the next property.

Jay Hinrichs · Answer

might want to use his money as equity and partner on deals. for him to loan you in 2nd position is not very appealing to most who know anything about finance's and loans.

What options does private money investor have to make money?

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