Firtst Deal - Using Private Money

[Mario Calabretta]

We are looking to avoid the conventional mortgage route and use private money to buy our first house. It's a large 2 story in a multi-family zoning district so we plan to place 2, or maybe 3 units here but the house needs a lot of work - issues that may not allow us to finance conventionally - 100 year old slate roof that is leaking (bank won't finance with deficiency like this unless it is fixed - something I do not want the seller to do), knob and tube electrical wiring (many insurance companies won't write a policy which all conventional mortgage holders require). I think this may be an opportunity to renegotiate with the seller at an extreme reduction in price if we offer to buy outright using cash. I have several willing investors (family members) and the plan would be to buy the house outright, renovate it, rent it out and then reappraise/refinance to pay off the private loans and keep the rental for cash flow. You know BRRR...

What are the implications are for private loans like this?  I can find contracts for this kind of thing online, but what regulations will we bump into?  My family members aren't drug dealers or anything like that but we are looking in the area of about $80K in private money and I know there are limits on deposits and transactions with banks that sometimes require an explanation.  I hate that kind of governmental oversight which assumes I basically am a criminal and have to explain myself to prove that I am not.

Also, how will this affect closing with the seller?

Your insight and advice would be most appreciated...

pax...