How much do the how much do I pay for the use of money?

How much do the how much do I pay for the use of money?

Rental Property Investor · 95660 · Member since 2018 · 46 posts · 17 votes

I'm doing the brrrr method and I found a good deal. I called up my friend Fred and asked him to borrow 50000 he said "no problem". I asked him how much he wanted for interest, he said "don't care". What is a good rate of return? 10%? I want to be fair. I also want to put his $ to work, get a good return so its beneficial to him to do multiple deals in the future. It will tie up his $ for 7-8 months. After 6 months seasoning I can refinance the property and get the cash out. I just found another deal for 65k that's REALLY a good deal. (I have a realtor and contractor looking at the two homes for 65k later today) So, what is a fair rate of return for the use of $? What is the going rate, if there is such a thing?

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Simon W.Business Member
Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 668 votes
5y

There is no such thing as a going rate. Do the math and see how much you can give him in return.

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  • Simon W.Business Member
    Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 668 votes
    5y

    There is no such thing as a going rate. Do the math and see how much you can give him in return.

    Accounting Properties LLC
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    CFO LLC
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  • Dan BeaulieuPro Member
    Lender · Knoxville, Tennessee (TN) · Member since 2016 · 422 posts · 667 votes
    5y

    @Louis D. Wow, that’s amazing. I pay my private lenders 12%, and I’m happy To do so. That makes it more attractive than mutual funds. And most other investments.

  • Lender · Philadelphia, PA · Member since 2017 · 225 posts · 72 votes
    5y

    @Louis D. If you want to keep a good relationship and use him money again in the future, 8-10% should be fair. I would also suggest to have some legal documents.

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