Flipping with Private money and HML

[Danielle C.]

Hello BP community! 

I am in the process of getting off the sidelines and getting into the REI world. We have located a flip and are in the process of figuring out the financing. We are looking at getting a HML and have a partner who is providing down money in exchange for half the net profit. My husband will be the main contractor and there will be some subs for work my husband cannot complete on his own. Can someone give advice or provide a sample contract for the private money and down payment assistance? Will the HML want our partners information as well or just ours? We all have excellent credit but the partner does not want to be involved in the HM piece of the deal.

Thank you!

[Casey Mericle]

@Danielle C. every HML or private lender is different, so asking for a one size fits all method won't do you much good as you will see wildly different approaches to contracts. If your partnering then do so in an LLC or entity of some sort. Most lenders won't lend unless you do this. This will also help with your partner being involved (or dis-involved as is this case).

One big hurdle you may have is if your partner wants to put a 1st mortgage against the property.  In a case like that you'll have a harder time finding a lender to borrow from.  If your partner doesn't record a mortgage or subordinates, then you should be fine.  It's really up to your partner to decide, some mandate a 1st mortgage, others don't even care.

I'd suggest just finding some lenders and comparing and contrasting their contracts.  Getting someone's off of BP may formulate some ideas that don't apply to real-life lenders contracts.