Hard / Private Money Math Examples

[Tyler Rowley]

Hey everyone. Can you write out some easy-to-understand examples of the math for paying back a hard or private lender? This is how I learn. I love to see realistic examples. What are the exact math equations for your monthly payments and exiting the deal? I want to be sure that I understand how the math works. Thanks. 

[Rick Pozos]

Private loan:

You buy a property for 120k. Your aunt Suzy is lending you 110k and you put in 10k, interest only at 12% for 1 year payable monthly.  You pay her $1100 per month interest every month until you sell the property. When you sell, your balance will be 110k to aunt Suzy plus whatever interest for the current month.

So you sell the property for 200k. The title company takes the 200k, pays taxes, title policy, atty fees, etc. 

Lets say there is 190k left over. Aunt Suzy gets her $110k because you close right after you made a paymet. So you walk away with 80k at closing.