Private money from relative - Help needed

[Martin Peter]

Like any good investor, I feel like I am working on it all the time.  I love it, so it's not quite like work, but ideas are always turning in my head.  So over the holiday weekend I was at my parents and we were talking about what I have going on in the fix and flip area.  I told them there were a couple of houses that I wanted to make offers on but didn't have the money available.  My father perked up and wanted to know more.  So we got to talking about the properties and what I might need and if I would be overwhelmed taking on more projects at once.  He seems very interested in what I'm doing and wants to help me out.  I just need to put a few things together for him.  He asked if I wanted a lump sum or more of a line of credit.  I am leaning toward the line of credit.

I'm looking for advice or a template for an agreement on a line of credit for private money.

I know my dad will give me a little bit of break on interest, but I want to be fair with him and not take advantage.  What is private money costing these days? 

He wants to see some sort of business plan outlining my goals and how the money would be used.  I can handle that.

Thanks in advance for any help you guys can provide. 

[John Horner]

I think 8% - 12% is fair on both ends.  My partner and I have a few different private money loans from friends and family and they are all between 8%-12%.  We typically have our private lenders loan money directly to the business.  This has pros and cons.  Obviously the money is there fast and you can make a move without their approval.  On the other hand, the benefit of a credit line is that you don't pay interest when you aren't using it.

We also personally guarantee our money.  We have enough projects going on that if we did lose money on one project (knock on wood) we would be able to make that up with the profits on our other projects.

Hope this helps.