Investor · Westfield, MA · Member since 2017 · 7 posts · 2 votes
BP,
I am working with several people on gaining capital for my business and I have a few questions in regards to investors. I am researching the site as well to find some information on this topic as well.
When an investor provides you with capital what are some basics terms?
Can I or do I offer an interest rate and over a period of time? If so, how much and how long are terms usually?
Can I or should I offer a percentage of the profit after each flip?
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
if you could get a loan for flips at 10% with no points that would be a huge win for you. 10% secured for an investor that is drawing 1% in a CD is a huge win for them.
Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
9y
The short answer is everything under the sun. Sometimes you pay points plus a monthly payment. If you are flipping it is nice to not have to make payments during the flip and just pay them off after the house sells. Are these friends and family or just acquaintances? Try and find terms that are win win for every one so they will want to fund your next deal.
If they are getting a set interest rate you pay them no matter what. If they are getting a percentage of profit they may not make anything if you don't make any profit.
Investor · Westfield, MA · Member since 2017 · 7 posts · 2 votes
9y
@Sean Walton - Thanks for your input, I appreciate it.
I definitely want to make it a win-win. She is family and wants to invest. She really wants to invest for the long haul, or as along as I am flipping properties.
That's what I am trying to figure out now.
Do I want to pay her an interest rate at 5,7 or 10 percent. Or should I provide her a percentage of the profit off each flip for a given time period. That is what I am trying to figure out now.
I was seeing if anyone has been in this situation and what were there numbers. Was it 5%, 7%, 10% in interest or was it a certain percentage of the profit.
It's a work in progress and I will continue to keep researching. I do need to figure this out fast. I have two properties that my partner and I are putting offers on over the next two days.
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
if you could get a loan for flips at 10% with no points that would be a huge win for you. 10% secured for an investor that is drawing 1% in a CD is a huge win for them.
Investor · Chicago, IL · Member since 2010 · 504 posts · 191 votes
9y
We do 1% a month payable at time of sale and no points. Loan terms are 6 months. For private we don't have an ARV limit but our normal deals coming in around 70% of the ARV. Hope that helps
Investor · Westfield, MA · Member since 2017 · 7 posts · 2 votes
9y
You all are so awesome for sharing your thoughts and providing information! I really appreciate it.
@Account Closed - So you pay 1% of the loan amount over the 6 month term? If you borrowed 50K, you would pay that person/investor $500 a month, totaling $3,000 in this example correct?
Real Estate Agent · Phoenix, AZ · Member since 2018 · 11 posts · 2 votes
8y
@Michael Kopyscinski Thank you for posting this question on the "forum"; it is still relevant a year later and provided the answers to the same question that I was currently facing. I am educating my self on flipping while simultaneously setting up meetings the raise capital.
How did your experience turn out with the two investors?