Borrowing money from relatives

[Evan Hauler]

Hello everyone!

I am looking to buy my second property, I purchased the first using a bank loan. Now my parents are wanting to buy the next one in cash, due to high interest rates. How best do I go about doing this? Are both my wife, mom and i all on the deed or should it just be my mom and I. 

Another caveat is that the money is going to be a gift my grandpa, who wants to see the families money being put to use, but does not have the will or health to be involved. So we are planning on making the money a gift to my mom and then a loan to me. 

Essentially, I am in need of a walk through. Thank you all in advance for your responses I truly appreciate it. 

[William Bratrud]

I started investing 7 years ago in a similar scenario. I was flat broke and about $60K buried in bad debt, we were living paycheck to paycheck and barely scraping by. After listening to BP podcast for about a year I had enough and knew that if I didn't take action nothing would change. Long story short, I took massive action. Without having a dime to my name I offered on and purchased a rehab property using private money from my Uncle, I searched online for a website to assist me in drawing up a simple "Note Secured against the Deed of Trust" This protected my Uncle and made sure he got the property in Lieu of foreclosure in case something unexpected happened. This also guaranteed that he would receive his money back plus 10% straight interest once I sold the home. This was a 6 month term at 10% straight interest and we supplied the note to the Title Co. when we sent over the purchase contract, they took care of helping us get it notarized and recorded against the deed of trust. When I sold that property I was able to completely pay off my uncle with his 10% interest, pay off our $63K in debt and still ended up with $42K in the bank. After this deal multiple family members and even some friends came to me and wanted to make a similar return on their money as well. To this day I have done virtually every deal using private money and I work with many family members, and friends to build my real estate portfolio. Using this method I reached financial freedom within 5 years and by 2021 I hit my first $1M capital in the bank. Previously an electrician I am now a full time investor and licensed Realtor who specializes in Helping other investors in East Tennessee. The dream is real but you have to put in the work! I think Grant Cardone said it best, " Everyone thinks their gonna leave there 9 to 5 and make lots of passive income as a real estate investor, but the reality is, your gonna trade your 9 to 5 for a five to nine, And if you ain't gonna do that you ain't cut out for this business......" Im paraphrasing but you get the point.

Bottom line, When dealing in SFR and Small Multifamily Private money is super simple to structure and with some basic steps anyone can make it happen.

1. Call your "rich uncle"( Friend, parent, boss, co-worker) and offer a 10%-12% ROI on whatever terms work for them.( 6mo, 12mo. 24mo. etc....)

2. Find a property to flip and put it under contract 

3. Draw up a simple Note: secured against the deed of trust and submit it to title for recording (Have the title co. help you with this step if needed or use an online document maker such as legalzoom.com, Rocketlawyer.com , etc...) 

4. Close on the property with the funds that your "rich uncle" wires into escrow/title

5. Get that thing rehabbed ( Use CC, or rich uncles funds, or any other method you can dream up to pay for the rehab)

6. Pay your rich uncle back and wait for him to say that was great let's do it again!

7. Grow your network of private money partners and repeat the process

*Other than you, No one needs to go on the deed unless they really want to. The note secures their interest in the property and removes their liability.