How to structure a promissory note

2 Replies

My main concern is on how to pay the money back and how much interest do I pay. Lets say I do a one year promissory note at ex. 10% for $60k. Do I pay $6k to the person no matter when I pay it off before the end of the 12 months? In other words, If I pay the full amount of the principal in the fist month, do I pay the person $6k in interest or is it deferred by month which would be $500 per month?

@Jovan Gonzalez

It's all negotiable so it's really up to you but I would personally structure it so I was paying the person an interest-only payment every money during the rehab period. Otherwise, you'll just want to calculate it to the day and pay interest for that many days at the end. So if you borrow $60k and hold the property for 123 days, just do:

$60000 * .1 = $6000

$6000/365 = $16.44

$16.44 * 123 = $2022

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