Private money questions

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Private money questions

Willie Smith
Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
I have investors that I can borrow money from. I’m trying to figure out how to pay my investor if they loan me $100k @10%. I’m going to be doing the BRRRR method so I won’t be holding the money that long. Will I pay them the 10% monthly on the 100k or at the end when I return the money? Thanks
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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Willie Smith it all up to what you agree on. I've seen both ways
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  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    8y
    @Willie Smith it all up to what you agree on. I've seen both ways
    1Reply
  • Andy Mirza
    Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
    8y

    @Willie Smith You can structure it either way. It depends on what you and your lender agree on. I would structure it so that you pay everything at the end since that would be easier for you. If the lender doesn't go for it, figure out what will work.

    0Reply
  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    @Jason DiClemente thanks for responding! If they want to get paid monthly interest payments, how would that work? $100,000 x 10% = $10,000 Do I break that down over the term of the loan say 12 months? $10,000 / 12 months = $833 monthly?
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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    @Andy Mirza thanks for responding! If they want to get paid monthly interest payments, how would that work? $100,000 x 10% = $10,000 Do I break that down over the term of the loan say 12 months? $10,000 / 12 months = $833 monthly?
    0Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    8y
    @Willie Smith exactly! 10% of the loan divided into 12 months.
    1Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    8y

    You can do it both ways, but I prefer to just make monthly payments. If you can do so, it helps put your investors minds at ease. 

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    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    8y
    @Willie Smith it is however you structure the deal. Many will do interest only and balloon payment,
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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    @Jason DiClemente thanks!
    1Reply
  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    @Andrew Syrios that’s a good point thanks!
    1Reply
  • Ericka Williams
    Investor · Austin, TX · Member since 2012 · 68 posts · 19 votes
    8y

    Good luck @Willie Smith I am a East Carolina University alumi from North carolina currently in Austin texas. I know the market is booming in that area. Still great for buy and hold or more flipping going on lately. 

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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    Originally posted by @Chris Seveney:
    @Willie Smith it is however you structure the deal. Many will do interest only and balloon payment,

     Thanks

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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    Originally posted by @Ericka Williams:

    Good luck @Willie Smith I am a East Carolina University alumi from North carolina currently in Austin texas. I know the market is booming in that area. Still great for buy and hold or more flipping going on lately. 

     Thanks, Go Pirates!

    0Reply
  • Scott Robinson
    Los Alamitos, CA · Member since 2017 · 25 posts · 17 votes
    8y
    @Willie Smith Hi Willie. If your new to flipping the investor will probably want less favorable terms for you (such as higher interest rate and points). When you get more experience the investors feel more comfortable and charge less points and lower interest rates. Usually the investor makes the terms on their loans. As a side note...I'm currently looking for investors. Any tips on how to get a strong investor list going? Thanks, Scott
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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    Originally posted by @Scott Robinson:
    @Willie Smith

    Hi Willie. If your new to flipping the investor will probably want less favorable terms for you (such as higher interest rate and points). When you get more experience the investors feel more comfortable and charge less points and lower interest rates. Usually the investor makes the terms on their loans.

    As a side note...I'm currently looking for investors. Any tips on how to get a strong investor list going?

    Thanks, Scott

    That’s something to think about. Most of my investors are good friends from my days in the NFL and a few local doctors. Hopefully I won’t get charged points! 🙏🏾 

    The best way to find investors are your local real estate clubs and attending events. Good luck! 

    1Reply
  • Sunny Shakhawala
    Parsippany, NJ · Member since 2016 · 64 posts · 49 votes
    8y
    @Willie Smith Whatever makes your lenders comfortable. I like monthly payments. I also require the borrower to put some skin in the game. (20-25%) of acquisition cost at least.
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  • Willie Smith
    OP
    Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes
    8y
    Originally posted by @Sunny Shakhawala:
    @Willie Smith

    Whatever makes your lenders comfortable. I like monthly payments.

    I also require the borrower to put some skin in the game. (20-25%) of acquisition cost at least.

     Thanks for your post! 

    0Reply
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