Rental Property Investor · Stafford, VA · Member since 2017 · 66 posts · 23 votes
Hey all, so I know someone with significant cash resources they'd like to put to work. I'd like to find a sample contract that I could create so that the lender is protected and I have a promissory note that holds me accountable and that proves where the money came from when it comes time for refinance (and taxes).
Am I thinking on the right track here? Does anyone have a contract I use?
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jordan Northrup You can probably get a JV or Lending contract template from a local attorney for probably an hour of their time. This is great as you can then use it over and over again as you can her money if you knock it out of the park!
You will need an attorney as there are many different ways to structure it. Do not do this on your own. The biggest mistake you can make is not protect your private investor as well as yourself. We generally have a note and mortgage or deed of trust and close at a title company.
Rental Property Investor · Stafford, VA · Member since 2017 · 66 posts · 23 votes
6y
Thanks Kenneth, So here's a little more information. The lender is an extended family member who's got about $300,000 from the sale of an extra house. SHe's very risk adverse and doesn't want to do the stock market. She's going to loan to me at 5% with a balloon payment after 365 days. I'm going to be investing out of state because the prices in Northern Virginia are more than she can afford. So I'll go back to my hometown in the midwest and invest. Between the purchase and rehab, I can be all in for less than $50,000.
So you're suggesting that once I have a property I want, get a lawyer involved and have them draw up the paperwork for the particular deal so I can get the money from her and send it to a title company?
I would talk to an attorney now so you understand the structure options and you can relay the information to your lender. That way your all set without any cold feet with your lender. I’m going to assume you are looking at a 6 unit or less. 365 days to purchase, get the permits and have your construction crew lined up might be tight. This is why you need to create the documents for the what if the schedule doesn’t go great and other surprises. 5% is a great rate.
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jordan Northrup You can probably get a JV or Lending contract template from a local attorney for probably an hour of their time. This is great as you can then use it over and over again as you can her money if you knock it out of the park!