What type of docs do you use when accepting private money as part of a deal? Do they hold a 2nd position on the asset?
I'm not quite there yet, but have some friends/partners interested in getting involved and I'd like to plan ahead.
I'll give you an example: Standard BRRRR situation. 100k purchase price. Go through lender for financing (25% down). We split the 25k down payment. I put up 10k and he puts up 15k. I perform the rehab. His money is loaned at 10%, and I pay interest only until we pull the capital back out through a refi, at which point he is reimbursed. This is just a quick "off the cuff" example. Not real numbers and not a real deal, so no need to analyze the actual numbers.
Obviously, I'll get input from my attorney, but would like to see how the BP community has handled these situations.
@Carter Crowley Thanks. I know banks will always be first. I'm going to rip through Faircloth's new book this weekend. Sounds like he hits on a lot of these types of situations.
Haha! Yes, exactly what I do. I'll send you the one I use if you like, just PM me!