Private Money Terms for Purchase of Property under contract

[A.R. Coningsby]

I recently found an off market SFH that I have under contract. I will be needing private money for the deal which i can secure via family member and they would like to be 50/50 partners. I however, am looking for some thing more beneficial to me as I found the deal, costed everything out, and have extensive leg work in order to finally get it under contract.

It would be a 48K purchase price with about 20 -25k in rehab materials needed, then about 85k ARV. I will be doing every bit of rehab along with everything else involved. The family member who agreed to lend me the rehab money and purchase money lives across the country and will be only be contributing financially.

Is there a better agreement that will work better in my favor, considering I have done and will continue to do all the sweat equity? any examples would be very appreciated.

[Kyle J.]

The thing about private loans is, the terms can literally be whatever you and the lender agree to since they’re just an agreement between the two of you. But you both have to agree to it.

Every lender is going to value their money differently, just like every borrow is going to value their contribution differently. It sounds like in this case, you know what your private lender values their money at (50% of the deal). That’s neither good nor bad. It just is what it is.

You can either accept it or find another lender with more agreeable terms to you.

It sounds like a straight debt lender is more what you’re looking for (one who just loans you money for a fixed return and not a percentage of the deal). If that’s the case, there are plenty of lenders like that out there. The only question is, do you personally know any who are willing to loan you the money you need for this deal?

Just keep in mind, 50% of a deal is still better than 100% of no deal.

Hope it works out for you whatever you decide to do.