Private money "testing the water"

[Clayton Crawford]

Hi All,

I want to share my upcoming adventure with the BP community to see what everyone thinks of this method of creating financing, as well as ask some questions about loan agreements.

I am currently waiting for a reply from the sellers agent regarding my counter offer. The price was initially 99.9k, i offered 94k, they countered, and so on... I'm looking for 95.5 and i'll be happy. Okay, once the offer is accepted and the property goes under contract,(If not this one, then the next property i get under contract) I have two gentlemen that are interested in financing the down payment. I will borrow 10k from each individual with a 10% ROI after I cash out on the property in 8 months. Here's the thing, I have the capital to invest for my down payment. I do not need outside investors to fund this particular project and they both know that. However, I approached them with the opportunity to collect some great returns while they sit back and do nothing. I understand that I'm giving up 2 grand on a deal. But, I feel like it's, first, just a generally nice thing to do, and second, a way to show that for me, it's not about squeezing every penny out of every deal, but building relationships and making everyone some money in the process. Also, by using this seemingly small amount of someone else's cash, I leave mine free'd up for the next deal! In my mind, I'm creating relationships for future endeavors, and making friends while i'm at it.

I'm using a very simple loan agreement that describes terms, timelines, late penalties, and failure to pay proceedings. It is then signed by the lender and the borrower and then stamped by a notary (maybe no notary.. just a witness). Here's my questions. Is that enough? Should i get an attorney involved for something like this? My answer is no, that it would only complicate the process and possibly make it too "bothersome" for would be investors. But, since i'm new and i love hearing from BP,  your thoughts and experiences are greatly appreciated!

purchase price: 95.5K

Reno:                   5k (Just need's carpet and Paint)... I hope.

ARV: 140K (...ish)

Thanks!