Making BRRRR work with private money lender

[Travis Vizier]

Hello all

I have a private lender who is looking to diversify his investment allocation/ currently all in stocks/401k. How can I form a deal that is beneficial to both he & I in regards to BRRRR strategy?

He is interested in providing a lump sum, rinse & repeat kind of deal.

Thanks in advance

[Kevin Yoo]

@Travis Vizier

As a PML myself, here is how you should set up the deal so that its a win/win for both and you can use me again in future deals.

1. First and foremost, provide a solid personal guarantee. Providing this would tell me you believe in yourself and this deal is a solid one. If you tell me you would not do a personal guarantee, then I am taking almost all the risk is on my shoulders. So, if the deal goes south, be prepared to take care of me. At least give me back all my principal.
2. Have my 401K be the purchaser and be on title or write up a strong promissory note and record my lien on the property immediately after purchase and provide me proof that it has been recorded. Private message me and I will send you a copy of Promissory Note we use.
3. Have some skin in the game for the first few deals until you have proven yourself. If you can do 20 to 30% of the deal, great. Perhaps I pay for purchase and you pay for rehab. If this is too much, then a few thousand dollars will do. At least pay for all soft or ongoing costs.
4. Pay me a respectable return. Unless your private lender does not care and would lend you for 6 to 8%, he can typically get 10 to 12% in the market place. Whatever rate you agree upon, make monthly payments. If he wants to be an equity partner, at the least give him 35% of the profit but typically it is 50% and sometimes more. 
5. Keep constant communication every week, until I tell you to stop calling me so often. And don't ever ever lie. 

I wrote all this from a PML point of view because that is who I am. But remember that you will win as well because you will do this deal and many other deals afterwards with hardly any money of your own. And if you perform well and take care of me, this will be easy money and really a great line of credit for you.