How to structure debt financing?

[Joshuam R.]

Thank you for reading. I want to put together family and/or friends funds together and buy a SFH to fix,flip or fix, hold.

Any one done this multiple times on their own and how did it work out.

example, I put 20K, friend 1 puts 10k, friend 2 puts 20k, family 1 puts 5k to have a total of 55k for down payment or repairs.

[Rob Beeman]

@Joshuam R.   Could be done a few ways:

Option A.) Create an LLC and all who invest become a member. The membership shares are equal to the investment that each make. Any person(s) running the show (locating the property, getting it rehabbed, getting it sold if flipping or rented if holding, etc. can receive a fee for doing so that all parties agree is fair. The profits are split according to the ownership shares.

Option B.) You are the sole member of the LLC if you are the one doing all of the work. The others putting in funds are private lenders that will receive their money back plus an agreed upon interest on the money. You create a promissory note with each person (each private lender) detailing their loan amount and what the return will be on their loan.

Option C.)  Do a hybrid of Option A and Option B. Some are members, others are just lenders.

Really depends on how active the financial contributors are going to be.