How to structure a deal using OPM?

Question

Hi, my name is Jeffrey. I am a new investor. I just closed on my first door and am already looking for another deal.

My first deal I did it with creative financing, so I'm looking to do the same on my second deal. However, I would like to use private money this time around.

My question is, if I do find a family member or friend that is willing to loan me the money, hoe do I go about setting up the financing? Do I write up a contract and have the person sign it? And if so, is there a standard contract im able to use for this kind of financing?

Your answers are greatly appreciated!!

Tom S. · Answer

@Jeffrey De Los Santos  Contact an attorney that specializes in these types of deals and have them right up the terms.  I've done a few seller financed deals as a buyer, and the paperwork is fairly straight forward.  Typically the note will outline the terms and is generally one page.  The lender will probably want security, so a lien will be placed on the property and recorded.  Generally $1000 - $1500 (incl title search), for me at least in VT.

Regarding your question on terms, for private money it's whatever you agree to.  For example, maybe 7% interest, amortized over 30 years for the payments, with a 5 year balloon.

Jeffrey De Los Santos · Answer

@Tom S. Thanks Tom

Jeffrey De Los Santos · Answer

@Mark Durham Hi Mark, thanks for your response. Would you be able to explain how to structure a private money deal? How much is someone typically charged and is it amoritized?