So I was told the best way to borrow money is from a private lender. That person told me that if I was flipping homes to pay back the private lender in a lump sum after selling it. I was wondering what everyone elses plan was to pay off a private lender. Whats the common and best way?
Also what if the private lender gave me money for a rental property? Would I pay him/her back once I start getting cashflow? Thanks!
We use private money for all of our flips. We borrow 100% of purchase, rehab and all closing cost. We are charged a loan origination fee and monthly interest only payments and then once we sell we pay them back in full, one lump payment.
Most private lenders want their funds back in a reasonable amount of time, usually 6 months or less so they would most likely not let you pay them back with the positive cash flow. You would most likely need to have a plan in place before you borrow like getting to refinance with a bank to pay the private lender back.
Hope that helps.
Great advice Curt
Thanks for the information! That really helps! I also forgot to mention that this would be my first time doing any of this. So I know private lenders would be nervous getting into business with someone new and young.
I'm doing a partial loan with private money for the first time on a flip I'm (hopefully) closing next week.
I am also paying him back once it sells.
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