First Private Investor, How Do I Make The Deal Work?

Question

Ok, so I have my first private investor who wants to lend up $250k for me to do a deal with. I'm thinking I can do a BRRRR with this cash/flip. However I have some larger opportunities such as a triplex for around 500Kish. The investor does not want to be on a second position for lien. Is there a way to structure the deal where they are on the deed and I can refinance them out at some point. How can I make this make sense for a larger than $250k deal while also putting them at ease? Can anyone share creative ways to get a deal done with this money?

Phillip Marshall · Answer

Its great out here. Just bought a 3 unit you can see on my profile in CB this year. @Lindsey Johnson

Phillip Marshall · Answer

Thanks everyone for the advice!

Jonathan Klemm · Answer

Hey @Phillip Marshall - Awesome work finding a private money lender.  I am always looking for more genuine people, which are hard to find, and borrowing money from the wrong people has never been my game plan.

I don't see any bankings willing to take a second position.....I feel like your best bet is either to find a seller financing deal or raise more money. There is also nothing wrong with flipping some houses with the $250k to generate capital. That has always been our model here in Chicago.

Pat Lulewicz · Answer

If its a smoking hot deal and you're confident beyond a shadow of a doubt that you can make it work, but trust is the biggest issue and they NEED collateral (I would definitely try to just make it an unsecured loan to get around this securitization issue), offer to collateralized other items you own free-and-clear. Car? House? Watch? Pokemon cards?

Lindsey Johnson · Answer

Hey @Phillip Marshall,

I think the advise you got above is solid. I do not have much to add. Just curious though, being from the Raleigh, NC area myself, are you investing in Carolina Beach? How is that going?

Eliott Elias · Answer

You can ask title to put them 50/50 on the deed, they will have to be on the loan as well.

Nate Sanow · Answer

There are ways to refi from one entity into another to do a partnership buyout. If he doesn’t mind not being a long term partner that is what I would do. basically llc 1 is your partnership and llc 2 is your solo entity and if your lender is okay with the buy out you refi into the new entity.

Otherwise an attorney could help you with partner buyouts in the llc. Sort of like buying out his share of the llc with the funds from the refi.

First Private Investor, How Do I Make The Deal Work?

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