The deal briefly is: we are 3 people. People 1 and 2 (which is me and another person) are given a loan with fixed interset to a third person to flip a house. Each one of us (including) the 3rd person are putting $50K each.
We already agreed on the interest rate and loan period, what else should we included in the agreement?
Who is going to find it? buy it? sell it?
Profit split? or what if there is a loss?
Who is doing the work? who is getting the bids? who is managing the construction?
Who is managing the financials?
Whose name or entity is going to be the holder of the deed? Insurance? Liability?
What if someone wants to exit this agreement early?
Every party's responsibility should be clearly defined.
Hi @Chris T.
It's a loan.
Person 1 (me) giving $50K loan
Person 2 (a friend) giving $50K loan
Person 3 (the guy that is buying, selling, and managing the work) is giving $50K (investing)
House purchase price $115K (it's in decent condition)
Houses of the exact size in the area $200K
Terms: person 1 and 2 getting 5% for their money (and the principal) when house is sold or after 6 months (whatever comes first).
If the house is not sold after 6 months, we are giving 3 extra months at 1% for each month, and after that (total of 9 months) we can sue for the money or sell the house ourselves and take our principal and interest. So roughly the loan investment and the interest for total of 9 months is 50+50 and 8% (5 plus 3) so around $108. I feel it's hard to loose if we need to sell the house and then take that money out.
My question is what else can be good to put in the contract?
We are like a bank that is giving a loan and not as investors.