Paying back private lender

[Jacob Beemer]

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!

[Curt Davis]

@Jacob Beemer

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.