Private Investor Interested in Loan with 7.5% Interest, no lien. How to structure paperwork?

4 Replies

Kind of what the title says - I have a private investor who is interested in issuing a loan for 12 months with a simple interest rate of 7.5%. How would I structure the paperwork so it is legal and binding? The investor is someone I know and trust, so I am just looking for something simple to have us sign so there aren't any issues anywhere down the road. 

Why wouldnt you go to a closing attorney to put the paper work together? 

@Mike Cowper  

  if its a know friend or associate you don't need a lawyer.. simply write up an unsecured promissory note.. YOu can grab one on line.. for free.

Unsecured promissory notes are fine for these type of collareral arrangemens unless the lender specifically wants to lien some of your real estate.

Your interest rate is low enough that usary is not an issue in any state I know.

Be aware though unsecured promissory note as the borrower there is no defense you don't pay they get a judgment very fast and the only way you get out of it is to BK

If you use property as collateral and no Personal gurantee then if you don't pay the lender can foreclose on the property.

If your in a Title and escrow state simply go to any title company and open and order tell them your doing a loan.. they will do the paper work.. some wont produce the note. you can do that again on line Notes are super simple no need for attornies for those if you have a modicum of business knowledge.. If your in an Attorney driven closing state then you can go to an attorney.. On the west coast we would never go to an attorney for this type of thing.

Unless you were talking very large dollars. 

A signed promissory note should be fine. We use a general template that was drawn up by one of our local closing companies attorneys. We just tweak the terms to whatever deal we are doing.

Thank you! This has been helpful - I'm newer to the industry so I wasn't certain what was required. Don't know what you don't know, right?

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