Hi BiggerPockets.com Community,
I'm about to start my 3rd SPEC home, so far I have used savings, 401k loan, CC's (BT's), unsecured PLOC and lot loans to finance my own deals. One of my friends is interested on financing my next deal, which will give me the opportunity to work on two deals at the same time. My question is the following, what assurances (collateral) can I provide to my friend as I am building the house. I own the lot free and clear (~33k), I expect construction costs to be around 185k - 200k. My friend is not willing to give all the money upfront ( it is understandable), but how do I protect him and protect myself ? My understanding with construction loans is that you make draws as you complete the different phases of construction, he will be O.K with something like that, but how is that done? A lien with a promissory note? Does anyone have experience with a similar case like this?
Thanks for all your help in advance!