Found investors, what next?

[Gabriel D. Zapata]

My wife and I have found a few private investors, but our question is where do we go from there? Do we set up a bank account for investors and where would we? Should we speak to a lawyer about writing up a contract for our investors with certain terms and agreements? Has anyone set up a google docs account for your investors to follow along with you every step of the way? Is there any sort of laws I should be looking out for that would avoid me from getting arrested is basically what I'm asking lol.

This would be for a fix and flip property where we would pay back their loan with interest.

[Kyle McCorkel]

If they are private lenders then you will need to decide on some terms. Interest only payments with balloon payment after 12 months, no prepayment penalty, etc. are some examples of terms.

Then you will need to decide if it is a secured loan or unsecured loan. Secured means you will be using the property as collateral (if you don’t pay then the lender can take the property). This will require more paperwork and most likely an attorney (I think). Unsecured basically means you are more or less giving your word that you will pay them back.

Typically unsecured comes with a higher interest rate to make up for the additional risk to the lender.

For the loan itself, google “private note templates” and that will give you a good starting point. If it is secured, there will be an additional document (I think this will be called a mortgage) stating that there is a lien against the property.

Private, unsecured loans are much easier to do (in my experience) as you pretty much need to sign the note, get the check, and then start making the monthly payments to the lender.