Using family loan and bank loan at same time?

[Matt Powell]

Also posted in the Deal Analysis forums...

Hi all - new PRO member, and happy to be here. Bear with me - the question is specific to my situation, and I'll attempt to keep it brief. All advice welcome.

Attempting to line up first flip deal, but stuck on one of the first steps - lining up financing. It's not a matter of not having options. In fact, I have many. I have good credit and income, and my folks - who are retired - have money they're willing to help me out with. I would estimate that help could be as high as $100k, but we haven't talked numbers. And moreover, my father is eager to be involved.

That said, it's my first deal, and naturally, I'm anxious about the outcome. I'd rather not borrow a large sum of money from my parents on a first deal, but at the same time I recognize that money from them would be cheaper than money from just about anywhere else.

So ideally, I'd like to use a portfolio lender for the bulk of the loan, and my father for a much smaller chunk. Assuming that's something I can do legally (again, I'm very new), I have a few questions:

• Will a portfolio lender loan only a portion of a property's appraised value, if I only need a portion? I assume so, but I want to make sure here.
• How should I structure the deal with my father so that it's professional and makes him money, assuming a positive outcome on the flip?
  • Split the profit 50/50?
  • Give him interest on his money? What's reasonable?
  • Both?
  • Other?

These may be simple and obvious, but I'm in the very earliest stages of understanding my options. Any advice welcome. Thanks!