Can someone please outline a private money deal

[Tony Deal]

I have saved and saved.  Done pavers, patios, windows, siding, concrete and everything in between to get enough cash to start buying and flipping houses.   I have now enough cash where I am buying 1 or 2 houses at a time.   I can easily manage the rehabs.  The problem is the avaliable deals that I have to pass up when I have 2 rehabs going at once.   I have looked into my family and their retirement funds.   I have a willing family member to help with a house.   I need to know a time line and actions to take to make it happen.   Any advice would be greatly appreciated.  Thank you. 

Tony 

[Aaron Mazzrillo]

My private lenders are all 0-3 pts, 7-12% interest only, 1 year to 7 years. Here are a few examples;

For rehabs, I have to lenders; 2 pts, 10% due in 12 months and 2 pts, 12% due in 36 months.

For rentals I have a variety of options. I recently put a guy in 1st place on a $300K property. He funded $60K, 7% for 7 years. 

I have another one I'm in escrow doing. The first is 7%, 3 years, 3 points. The second is 8%, 3 years with unlimited 1 year extensions, no points.

LTV depends on the deal. Some have limits on the minimum and maximum amount they will fund. For example, one guy won't lend less than $100K and he really doesn't even want to do loans that small. Others won't go over 60% of ARV. None are friends or family members.

How it work; you set up your deal in escrow, make the call for private money, your lender wires in, escrow draws up the note, you sign it, a trust deed gets recorded against the property, and you close. 

Since you are considering working with private lenders, you have lots of options on all the terms. You can do monthly, quarterly, or a lump sum payment of principal and interest when the deal closes. You need to talk with your lender and figure out what he/she is trying to achieve. Long term growth is typically lower interest, less points, but a term of several to many years. 

As you have figured out, you really can't grow in this business without  cultivating a few private lender resources. Some of my best lenders are former real estate people who are now not so active. They understand the game and are willing to keep playing without having to do all the work.