How to Structure a Private Loan to My Son for a Fix and Flip

[Harold Albertson]

I am considering funding a deal that my son is looking into. It is a cash only as is fix and flip. He has about half the cash needed and I would be loaning the other half through an LLC that I have with my brother. My question is how to structure the loan. Is 10% a fair rate for a personal loan and would you charge any points? The time period should be 3 months but could stretch to 6 months. Would you put a lean on the property?

[Benjamin Aaker]

Sounds like a risk to your relationship. I know you want to help him but what happens if he doesn't pay you back on time or at all? With family, you should consider just giving him a gift. There is a tax benefit and you can welcome him to pay you back but not have an expectation. Also, with your brother being involved, you risk that relationship, too.
I know plenty of people make loans to family and do fine, but consider the non-financial risks as well.