Lifecycle of Private Money

[Andrew Gunther]

Hello BP,

One of my Grandparents recently passed away and my Mother is inheriting a nice sum of money. They have talked with me of possibly funding some of my deals going into the future. My initial thoughts are that we would find BRRRR deals that I could refinance out of and get my parents their capital back + interest. We thought that they would be more along the lines of a silent investor just putting up funds and I use my connections and deal finding skills to do all of the work.

With that said I am wondering what the lifecycle of private money looks like. By this I mean how do they actually fund the deals (is escrow involved as a third party to hold funds?), what is a standard return look like for a private money investor, what forms would your recommend we get from a real estate attorney, and what legal entities are recommended for this?

I would also like to get some insight on what a refinance would looks like for something like this. Assuming we pay cash for the property and the rehab, how would I go about refinancing. I have recently started a mobile auto detailing llc out of college that has been a side hustle for the past few years. I do not have the two years of self employment tax returns that are required for most new home loans or any W-2 income since 2015 as I was in school and not working a regular job. Would I be able to refinance or what would my options be? I do not want to to move forward with them just to find out that they will be stuck with a property and cannot get out of it because of my financial situation. I have excellent credit, just not much paycheck history.

Thanks!

Andrew Gunther