Private Money Payout Options

[Josh Coleman]

Hi all, 

I am going to be starting my real estate investing journey this year, and I plan to use private money to finance my first few deals using the BRRRR method. If you have someone who wants to lend you money with the intention of you using it on multiple deals, what is a good way to set up repayment options, as opposed to just paying them back in full after each refinance? Do you pay them out a flat percentage, give partial ownership on the properties, or can you just treat each deal as a new contract with them?

Thanks in advance!

Josh

[Jay Hinrichs]

Quote from @Andrew Postell:

@Josh Coleman hmmm, so if you aren't REFINANCING to pay back your lender then it's not really a BRRRR method. That's just a straight purchase. When your lender creates the note with you that note will outline the terms and conditions of the loan. That note will be signed by you at closing and it won't change for the life of the loan....that is, unless you REFINANCE that loan.  So whatever the payment is at closing, that's the payment from then on.  Does that make sense how I am describing it?

I think what he is asking Andrew is if he has a private money investor HML who he wants to do lets say 3 deals back to back does he just pay them off on deal one once the refi is done then they do a new loan for deal 2 and so on. My answer is yes you would pay them off and then the private lender or HML will then make you a new loan.

the only way this would work different is if you bought 3 properties at the same time and you had release clauses in each one for a partial pay off but regardless the lender your lender on the private or HML side is going to get a check and then have to turn around and lend it to you again. As they will want a lenders title policy etc at least if they know what they are doing they will want one.