Private Money Lending For Rental Properties

[Joshua Davies]

Hi Guys, I have a question (maybe a silly question) regarding using a private money lender to start investing in rental properties. I'm relatively new to the REI world but have been involved in real estate for a while, through studying my BSc in Real Estate and working the commercial world after. I know a guy in the UK, where I am from, who is in a position to be a private lender and I am hoping to purchase my first rental property within the next 12-18 months. My question is: How would a private money deal structure look for a rental property? I understand exactly how this would work for a flip/rehab but as the property is not being sold afterwards, how would the lender get the return he would be looking for? I know a lot of people on here, and especially the people on the BP Podcasts that I have listened to use private money, but I don't understand how a private money deal can be beneficial to both parties when it comes to investing in rental properties. If anybody could provide me with some info as to how this would work and provide me with a example deal structure that would be much appreciated. Many Thanks, Josh

[Cody L.]

Easy: they'd just write a note, secured by a lien on the property, for whatever terms you agree to

(X years, y rate, etc)

Same as what financing for a flip would look like, but likely lower rate.

The issue is what return does he expect? Private lenders normally want a return that's higher than what you can get from a traditional lender on a single family.