Investor · Tulsa, OK · Member since 2013 · 37 posts · 3 votes
I have a company I started with a friend in which we buy-and-hold SFR. After buying our first 2 properties with our own money, we are seeking to use OPM for our 3rd house that we just "bought" - pending inspection.
We have a private money loan set for our down payment + closing costs which should be roughly $25,000.
My question is what is the standard(best) way to payback our private investor? 5-7-10 year plan? We have known the investor a very long and trust/loyalty is of no concern; we all want what is best for both sides. I would appreciate any feedback/advice on how you would handle the matter.
We came to an agreement 3 months ago to do business with eachother. We are confident in one another that we will find the right formula before closing in 5 weeks.
But yes Ben, for our future deals we would like a more organized plan, we just have no experience with this yet but would like that to change sooner than later :-)
Hey Michael, yes we felt paying principal & interest made the most sense, between 5-9 years & thus far we have felt around 5.75% makes the most sense.
Our investor wants us to pay him less than we would to a bank to save us money & close to what he would make in investing elsewhere is how we came to that amount. The sooner we pay him back the better & right now are leaning towards a 7-8 year plan while leaving the option open to paying off sooner, giving him a monthly check until paid off.
Matt Lawrence, really -- you're getting $25,000 at 5.75% for 7 years? That's great! You have a really good friend! There are many out there that would pay 7-8% for that kind of money (over a shorter time frame).
Yes Dawn, we're very lucky to be blessed with his generousity but don't expect deals like this from others that we don't know well. We just want to make sure we have everything aligned properly where neither side has regrets a year from now.