Paying back private lender

4 Replies

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!

@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.

@Curt Davis  

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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