Terms for Private Loan for Income Producing Rental Property

[Oliver Platts-Mills]

We are under contract to purchase our fifth investment property in Virginia. The property is a large house that was split into six apartments and is currently fully leased. Over the past year my wife and I have transitioned to working on real estate full-time and our lack of W-2 form (and less than 2 year record on two of our properties) makes it difficult to secure FHA financing.

We are working with a private lender (Friends & Family network) to lend us $200,000 and I'm wondering what terms we should be offering/suggesting? Does anyone have any recent experience? I was hoping to get a 10 or 15 year note for around 5-7%. The property is operating at close to a 14% capitalization rate. Our other option (currently available) is to use a HELOC to finance the purchase but we would like to hold this property for some time and I don't want the interest rate risk on a floating rate loan.

Thanks,

Oliver