Family loan advise

[Chris Syrett]

Hi everyone,

I am new to RE and I am looking at doing my first deal. I am looking at purchasing a SFR that has a one bedroom apartment in the basement that I can buy for 60k. It needs about 30k of rehab and the ARV comes out to be around 140k. My plan is to live in the house and rent out the basement which should cover about 90% of a 90k mortgage payment.

My parents have offered to loan me the 60k to purchase the house and after rehab I plan to get a conventional loan on it to pay them back. My parents insist on not being a part of this in anyway as far as they don’t want to have a lien on the property, be on the deed, co-owner, nothing. I know if they just wire me 60k that it will be subject to a hefty gift tax. They don’t want interest but I am thinking we need to write up a personal loan agreement with interest. If they want to gift me the interest back later that’s a lot less than 60k. I don’t want to do anything funny or get in trouble. I want it to all be legit. My dad is old and old school. He says it’s nobody’s business if he wires me the money. Of course we all know it will be reported so something needs to be in place. I would like to avoid an attorney and just write up or find a template to use. My dad is weird about attorneys also. I know in the end he will say to just keep the money but I am a responsible adult and will pay him back. It’s one thing to be in debt, another to be in debt to family.

My questions are:

1. What is the best way to write up a loan to make it all legal? Where can I find a loan template?
2. When can I get a mortgage on the house after rehab? Do I have to wait a year or does it matter because the house was paid in full at time of purchase?

Thanks!