Regarding a "loan partner" vs "equity partner"

[Patrick K.]

Hi all, have been binging on BP podcast these days, I keep hearing Mr. Greene mentioning whenever he gets into a project with a partner, he prefers a "loan partner" rather than an equity partner. 

I am wondering how does one set up this partnership?

Is there any difference between a "loan partner" and a private lender

Is the "loan" registered against the property?

if so, will it interfere with getting a mortgage? assuming a lender doesn't like/allow a second mortgage?

Thank you for your time. 

[Steven Goldman]

Quote from @Patrick K.:

Hi all, have been binging on BP podcast these days, I keep hearing Mr. Greene mentioning whenever he gets into a project with a partner, he prefers a "loan partner" rather than an equity partner. 

I am wondering how does one set up this partnership?

By creating a operating agreement showing the interests of the parties. You can have a capital partner who can contribute the money and a operating partner whose contribution is the running the day to day operations of the business. In the operaitng agreement you adjust membership shares to reflect the agreement you reach.

Is there any difference between a "loan partner" and a private lender

Yes, a private lender lends you their own funds in exchange for a mortgage. A loan partner takes a position in the LLC. or entity.

Is the "loan" registered against the property?

We advise our borrower to structure the relationship as a membership agreement with a buyout at the end of the project. Some private lenders will take a note only and then record the note if you default.  

if so, will it interfere with getting a mortgage? assuming a lender doesn't like/allow a second mortgage?

Yes, but not if you structure it as a LLC membership agreement. 

Good luck.