1st Time Home Buyer: Using prívate lending + a conventional loan

[Jenifer Janniere]

Hi BP!

I’ve been  researching and discussing creative options to purchase my first flip and what like some feedback from  the BP community. A few things that I should state: 1.) I don’t have the money for the down payment or rehab cost, I would like to use a private lender to fund both. 2.) I was approved for $270k. 3.) I am looking to purchase property in Phoenix AZ. 

The area  that I am going into analysis paralysis about is RTOI agreement. After reading and learning so many different options I’m unsure on what term(s) to create. I would like opinions from anyone that has purchased a property with a simialer scenario. Which of the following terms did you go with? Was it a win-win for you and the PL? If you used an agreement & term that is not listed please do share. Thanks in advance!

1. Pay 6-8%  to lender , payout at closing. Percentage range is based on working with an  inexperienced PL that would be passive. 

2. Split the profits at closing : 60 /40 split. 40% is for the lender, the PL would be passive.