I have a few people family included, possibly even my doctor lol that have come to me and brought up the fact that they would like to invest in my business. We're in the beginning stages of discussions. Now I know it can be structured any which way but I'd like to hear how you are structuring it into your buisness NOW in comparison to when you first started.
Like do's and dont's if you will.
What are your typical terms when discussing with them? 8-12%, any points? Mind you I do not take lightly the fact that I would be using someone else's savings to invest into my company and at no point would I risk their trust, partnership and savings.
My mindset is that they get paid no matter what even if I don't have dinner on the table for a month. Thoughts?
When we look for private loans, we offer 9% interest only and no points. I've heard that this is the "sweet spot" as anything 10% or over sounds a little scammish, but 9% is still a really good rate, especially for people who have their money in CD's and what not. That being said, we hold and then refinance with a bank after the property has "seasoned" and the bank will loan on appraised value instead of cash in. If we were just flipping, we may offer a point too (if we needed to, but I wouldn't start there).
Thanks for responding @Andrew Syrios a few follow up ?'s. Did you have an attorney generate a contract for you? Did you just use a title company to keep records? Or was it a handshake kinda deal? Any info on that would be great!
Also as of right now I would be using it to fund fix n flips and hopefully buy n hold but I can't seem to figure out how to structure them to protect all parties involved...
I am also wandering about sec rules and how they apply to any of this. I'm not trying to promote but I would like to show others what I'm doing. Does every state have different rules and regs? Sorry for he noob questions just trying to get straight answers. Thanks again.
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