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Updated 4 months ago on . Most recent reply
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Structuring Deals for Private Lender
Hey everyone, I'm in the refinance step of my first BRRRR and am thinking about how I can fund my next deal. I had to put about 25k of my own money into this first deal between the down payment, agent commission, inspection, closing costs, and holding costs, so I'd like to get as much of that covered as I can on my next deal. I'm familiar with how a hard money loan is structured, but structuring a deal from a private lender seems like the wild west. Is it purely interest? Points and fees like a traditional bank? Obviously would change from person to person, but I'm curious what people have used before that has been effective for both parties.
Ultimately, my vision is partnering with a private lender so I can spread my funds across multiple deals at once and scale quicker; I'm really happy so far with my agents, contractor, and refi lender, so I feel like getting a great lender would be the next step for me. Thanks in advance!
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Here's the secret:
Use a private lender for your down payment/closing costs, and a regular private lender for the debt. Terms for the private lender will vary. Some will just charge you the interest, some will charge interest + points, some will just want a % of the profit at sale/refinance.