How do you structure a payback to a private lender who takes a 10% position on your deals!!

4 Replies

I am a newbie to everything, learning as I go and trying to learn about purchasing using none of my own money! I am looking at offering on my first deal or two and have found a private lender to work with but they want me to have a min. Of 10% in the game. I would need to find someone to work with for this 10% as well as I do not have the capital right now. My question is, if/when I find someone for this 10% how do I structure the payback to them? I know there are a few options and they may have a plan themselves but what is most common? If I offer them say 10% or more on their money and make a five year payback plan, how would the payback work to get them their principal back plus the 10%+??? I am trying to wrap my head around this!!

Thanks guys!!

Just do it as a personal loan. Set it up however you want. Simplest would be to make interest only payments to the lender then pay it off after the house sells.

Trying to do fix and flips with no cash of your own is very difficult and very risky. Running out of cash and losing the house and the money you've already put in is a very real risk.

Sorry, I should have qualified this, I will be doing buy and hold for rental cashflow, not flipping! Thanks for the advice though.

@Shaun Anderson

Are you purchasing these properties in Saskatchewan, elsewhere in Canada, or in the U.S.A.?

Still, just do it as a personal loan with a five year amortization schedule.

Investing in rentals with no cash of your own is very risky. If you were dealing with a conventional lender they would not make the loan if you borrowed the down payment.

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