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 or should I just stick to a smaller BRRRR? Can anyone share creative ways to get a deal done with this money?

Phillip Marshall · Answer

@Zackary C Dunn I see you sneaking on my posts. Hope you're doing well man. I haven't asked that but I will.

Erik Estrada · Answer

Hey Phillip,

What are the terms on the loan? If you don't want to partner with that investor and only need financing, why put them on title?

Zackary C Dunn · Answer

Have you asked the seller if he will seller finance the rest in 2nd position?

Andrew Bang · Answer

Create an LLC with both you and the private investor.  Buy the home with the llc, then you will both be on title and can leverage the 250k

Erik Estrada · Answer

What’s the LTV?

Phillip Marshall · Answer

@Erik Estrada, The terms for the 250k are 30 year, 7% interest, 5 year balloon. They are giving the large amount of cash to use for a deal, I wouldn't be able to get the financing for example on a 800k deal without their cash. However, they do not want a second position for their money. They have no problem using it to outright purchase something for 250k or under to be first position.

Phillip Marshall · Answer

@Andrew Bang, Thank you for the info. Any certain terms that should be in the deal deciding when to refinance them out?

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

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