Private Funding

[David Moore]

Looking for the whiz kids out there to lend some advice on acquiring private financing. Now, here is the deal. Next month I'm closing on property #3, and that has left me a little cash shortage. At the same time, a lakefront property in a southern Minnesota town I invest in is going to foreclosure. I've got the O and E title work already ordered. My real estate agent knows the family personally, knows how the house was acquired, and is as perplexed as I am that the owners haven't sold it to avoid the foreclosure. I've sent a letter to the family attempting a sub to, but with no response, it is looking like a trip to the sherrif's sale. I put out a call for private funding. I've got three good sources who have responded. How do I do the deal? I'm thinking 55K will secure the property from the bank. How do I do the private funding? Two of my private funding sources are quite experienced, so I'm sure they will have terms. But what is reasonable? The term will be one year only. My realtor is highly confident in a handsome ARV.

I have a lot of dumb questions in this. Acquire the funding in my LLC or get an S Corp? I assume there is a contract or promissory note. Any idea how these get set up? Be as thorough as you can please. Thanks.