So I have flipped three homes now and I'm trying to get my money costs down, or at least be doing what makes the most sense. Which of these two loans that I have done makes more sense to continue with:

1. I have a private money lender (who is a friend) He funds the purchase price at a flat no payment till sale of home rate of 8%. He buys the home, puts it in his name and I do the renovation side of things. I fund the reno, structure and deal with the sale and then bill him at the end for the profit minus the 8%.

Our first project was bought for 160k and I paid him a total of $12,800. I paid for the renovation $20k and we sold the home for $250. After all fees associated with the sale I billed him $59k leaving my "profit" or income at $39k.

2. The second home I did I used a hard money lender. This home too was purchased at $160k. I had to put down $32k and pay $7k in fees for the loan. I financed $128k. The reno cost me $50k and took 4 months to complete and close the sale. I had a 12% apr ($1280 payment each month, but the first two months were tied into the $7k up front fees). Due to the larger down, I borrowed some for the reno and accrued $5600 in money costs. So total I paid out $15160 in lender fees. This home we sold for $290k and Im slated to make $39k after all sale expenses and reno expenses deducted.

The private money seems to cost me a bit more but the stress of not paying a monthly fee is nice. Id like to get thoughts as to if you think one or both of these are good/bad or?

Also, is there any tax differences between the two. The first looks like true general income. The second was in my name and could IRS out as a flip project.

thanks for helping a new guy trying to work through this new endeavor...

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Which loan is better?

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