Structuring a 12-Month Note—Prefer Junior Lien or Personal Guaranty?

[Charlie Green]

I'm finalizing a $100k private note at 30 % APR to fund multiple flips (one property pledged as junior lien). Lender is a family friend new to real estate.
Term sheet basics:

• Simple interest, balloon in 12 mo (option to renew 30 days @ 1 % fee)

• Junior mortgage on a flip with $260k ARV, $175k FMV today PP $150k

• Personal guaranty from me
  Would experienced lenders want both the lien and guaranty—or one or the other? Any Ohio-specific pitfalls recording a junior position I should know about?

[Chris Seveney]

Quote from @Charlie Green:

I'm finalizing a $100k private note at 30 % APR to fund multiple flips (one property pledged as junior lien). Lender is a family friend new to real estate.
Term sheet basics:

• Simple interest, balloon in 12 mo (option to renew 30 days @ 1 % fee)

• Junior mortgage on a flip with $260k ARV, $175k FMV today PP $150k

• Personal guaranty from me
  Would experienced lenders want both the lien and guaranty—or one or the other? Any Ohio-specific pitfalls recording a junior position I should know about?

a lender wants both, lien on a property and the guaranty. The issues with ohio in general is if there is a default foreclosure is expensive and time consuming. 30% also is egregious but also this deal looks like a loser to be honest. If you are purchasing it for $150k and spending $100k which would be $30k in interest your ARV is $260k but you are in it for $280k....

Math is not mathing. You mention other properties, where are those?