Logistics of private money for rehab
Hi all, I have a SFR under contract that will be closing in the next week, and I will be doing a BRRRR once tenant moves out (next few months). I am funding the down payment myself, but I would like to obtain private money for the rehab.
My question is surrounding the exact logistics of making this possible if I do not currently have an LLC.
Qualifying question: do I explicitly need an LLC to do this type of transaction without setting off IRS red flags?
If no...
Once the promissory note and other loan documentation is in place, how exactly do I take this cash in? Does the lender wire to my checking account, then I pay the GC or tradesmen directly? And once I complete cash-our refi, I would wire loan proceeds + agreed upon interest back to the lender?
From an IRS perspective, can I receive/pay out loan proceeds from a non-business checking account? e.g. I ONLY use this checking account for real estate purposes, but it’s not considered by the bank to be a “Business” checking account.
Reading Matt Faircloth’s Raising Private Capital and while being a great book, still need some more info regarding the operational aspect of the transaction
Thanks & Happy new year!!
Dan