Private Investor Tax Implications

[Ben G.]

I have an investor who has offered to give me 15% of net profit after a deal closes if I fund the purchase.

What would my tax implications be if say I funded a $20,000 purchase and the sell ended up netting him $10,000, which in turn would net me $1,500 in profit. What would I be taxed on? I plan on doing this in a LLC if I decide to pursue it.

Any advice is greatly appreciated. 

[Jon Holdman]

Yes, it will.  The mortgage or deed of trust (whichever is used in your state) will have to be prepared.  You will also want a promissory note.  The title company may have templates, but even if you find some you probably want to review them by your attorney.  You're  creating a mortgage.  You want to same documentation as any lender.

Typically the borrower will pay recording fees.  But not the fees to create the documents. This may seems expensive, but presumably you will do this again some day.  If things go bad, and I've made loans where they did, these documents are your protection.