Need help with an investor and a cash purchase

[Ryan Pearlman]

 If someone lends me $300,000 to purchase a property in cash, is it as simple as them just sending me the cash and me sending it back when the loan from the bank comes in ?

In this specific deal, someone was going to send me 280,000 to purchase a property in cash. I am pre approved for a loan from the bank and when the bank has the funds ready for me, I was going to take that money and pay back the investor plus an extra $3000 for the 30 day loan. Is there any paperwork, taxes or extra steps I need to take or is it as simple as the investor just sending me the money?

Keep in mind the bank will be aware of all details of this deal.

[Scott E.]

If this person really trusts you, then yes it's as simple as them just sending you the cash and you paying them back after you get your loan from the bank.

Technically what that investor should be doing is putting a $300,000 lien against the property with both a mortgage (which secures their interest) and a note (which details the terms of the loan). This step is only necessary to protect their interest.

Remember that the loan you get from the bank to pay this person back will be considered a "cash out refinance" loan, which will mean they will lend at a lower a LTV ratio and higher interest rate.