Documents Needed for Private Lending

[Zachary Wurtz]

Hello, 

I have two questions - hoping some of you may have advice based on experience.

I am intending to team up with a coworker who plans to pay for the rehab costs of a BRRRR strategy as I pay for the down payment. We both want to be equally involved in the rehab as a team - up until he receives his money back after the refinance. What kind of documents would I need to cover both of our ends in any worst case scenario and where could I find some examples?

My second question is for future private money lending. If I ever plan to use a family member or friend who may not want to be fully involved in the process - what kind of documents would I need to provide that person that ensures their end is covered and could fully explain numbers, process, timeline, and security for them?

Respectfully,

Zach

[Robin Simon]

Quote from @Zachary Wurtz:

Hello, 

I have two questions - hoping some of you may have advice based on experience.

I am intending to team up with a coworker who plans to pay for the rehab costs of a BRRRR strategy as I pay for the down payment. We both want to be equally involved in the rehab as a team - up until he receives his money back after the refinance. What kind of documents would I need to cover both of our ends in any worst case scenario and where could I find some examples?

My second question is for future private money lending. If I ever plan to use a family member or friend who may not want to be fully involved in the process - what kind of documents would I need to provide that person that ensures their end is covered and could fully explain numbers, process, timeline, and security for them?

Respectfully,

Zach

The best bet is likely to create a new LLC that lays things out in a straightforward but legally strong and standard operating agreement, etc. - LLC doc sets are fairly cheap and easy to create these days (with limited assistance from lawyers) and its much much better to have that cover bases on arrangements like this - it will also fit nicely with financing options - whether you take on debt from a lender in a co-equity situation like your first plan (refinance loan to LLC post rehab?) or as a psuedo lender if you want to be more on the private lending side down the road with future arrangements