Private Money

[Landon Dean]

My strategy, but not sure how it would work:

Need about $30K (for 20% down payment) to purchase another buy & hold rental roughly around the $110K - $120K price range. I have two possible private money lenders and was going to take out HELOC on my current home to get all the funds needed for closing and then take out conventional 30 year mortgage on the purchase. Will the below strategy work to use as my 20% down?

• Private Lender #1 - $10K
• Private Lender #2 - $10K
• HELOC on my home for $10K

With all this being said what is the best way to pay back private money lenders and is there a way to set up an amortization schedule for $10K? Do you pay them monthly, lump sum....I assume it's whatever you work out with them. I was going to offer them 10% ROI so for their $10K investment they would make $1K.

Thanks BP members for your help in advance.

[Darren Eady]

These are simple transactions so I would keep it super simple and only complicate if they need you to.  Put your terms and intentions on paper and both of you sign it.  If these lenders are family, they will probably not push the title issue and require a lien.  If they are not family, they will lien the property.  I would simply put loan to be $10k and repayment to be $11k on or before a 12 month time period.  Good luck!