How to structure a private money loan?

[Niv Nissim]

Hi guys,

I have a couple of friends and colleagues that are interested in lending me some money for projects I’m doing.

What options do I have to give them security except for “first lien position “ on the property?

Most of the projects are fix and flips or BRRRR

[Chris Seveney]

Quote from @Niv Nissim:

Hi guys,

I have a couple of friends and colleagues that are interested in lending me some money for projects I’m doing.

What options do I have to give them security except for “first lien position “ on the property?

Most of the projects are fix and flips or BRRRR

If you have multiple investors, now you typically do not pass the Howey test and its a security. They either need to be 1st, 2nd position etc., or all in a LLC but when in a LLC each has voting rights (so lots of chiefs). If you are the sole person doing all the work, then you need to syndicate the money. To get something like that setup will run you $10k to start (just for the docs), then of course costs for ongoing compliance.