Updated over 9 years ago on . Most recent reply
Private lending - structure and terms
What terms should I expect, when using private lending? I am new to the real estate investing, and apologize if this is not clear. I am happy to elaborate as needed.
If I reach out to friends and family, to present an opportunity, what should I be offering, as far as the money? Is it a percentage of future cash flows, or just a simple percentage return on the amount borrowed. e.g. four friends combine to lend me $100k for a passive income investment. The property generates $1200/mo cash flow. Am I divvying up that cash flow, and handing it to my friends, or, do I pay them some amount after whatever the terms of the loan are?
Thank you.
Most Popular Reply
@Michael N., welcome to BP. The terms can be either a percentage of the deal, a fixed percentage rate, a flat fee, or any combination that you and your investor's wish. It may be prudent to think of a few ways that you would be comfortable rewarding your lenders/partners. Then, when you find a willing lender/partner you may be better able to find a strategy that will fit their needs and expectations.