Making a fair deal!

4 Replies

Hi fellas,

I have an investor (family member) willing to jump in a venture with me. I'm at the stage of talking to the bank in the next coming weeks for a pre-approval. Ideally, think I posted this here, I would like a single family or duplex to buy and hold. The investor just want to give a financial help for me to accomplish my goal but does expect earnings in return. This is were I am stuck (new in the game) how can I make a fair deal for someone that doesn't want to be a property owner or managing the property (guess this is a good thing as I will have full ownership) but wants to make cash for their investment.   

If it helps, I'm thinking of purchasing something around the 150-200k and with a 20% down (half split).

Thanks all in advance and please ask to clarify if I am not making sense.

Hi @Norbin Cruz , this is simply a loan. This is what is called private money since the lender knows you. In terms of what is 'fair' that is up to you and the family member to decide. The rate can be anything from 0-10%. Usually their loan is protected by being first lien holder on the property itself.

A private lender isn't necessarily someone you know. The generally accepted description of a private lender is someone (whether you know them or not), who lends their personal money (IRA, stocks, money in an investment house account, cash in the bank not earning enough), for investing. They are not in business to lend money; those in business to lend money would be a hard money or traditional (bank, or credit union) lender.

A private lender is someone you have a relationship with, either directly or through another person. The lending is likely as much to do with the social relationship than the property itself. If you don't know them and they advertise their willingness the lend money then it's not private regardless of how they are funding that money. Plenty of hard money lenders fund out of (IRAs, stocks, cash - theirs and others). And their lending is purely based on the property.

Regardless, that's not germane to this conversation, his family member is a private lender.

Thank you Michael and Kevin for the feedback and pardon the late response. Alerts were getting stuck in my junk folder. I think I have a better understanding on private lending now - in fact Brandon covered this a bit on the webcast.  I'm meeting with the lender this weekend to discuss loan agreement and we are already on the hunt for our first BURRR! 

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