Structuring Deals for Private Money Lenders

[Donny Hughes]

Hey all! What's the best way to structure a deal for someone providing you with private money? AKA, what are the most common options for paying back the individuals that provide you with the funds for a real estate deal?

I've had a few friends that are interested in doing deals with me ever since I completed two deals on my own (one a house hack and the other a BRRRR). They have cash they've been sitting on during COVID and want to invest in my potential projects. This is exciting; however, I'm not quite sure what the best ways are to finalize their investment. Obviously, the deal depends on the risk profile of the individual, how much money they have, how hands on they want to be, etc.

In my example, I have a potential investor with enough money for a down payment for a BRRRR. They have a busy schedule and don't want to feel like they have to manage anything (which is great for me!). In my head, there are many potential options, but I'm not sure what the best ways to structure a deal are.

I haven't been able to find guidance on this topic, but I know it's out there because this is a huge way to make deals! Please let me know if you all have any ideas or experience. Thanks in advance team!