Structuring Private Money Lender/Investor Agreements

[Charles Patterson]

BiggerPockets, I am looking for your opinions and wondering what you do.

I am getting to the point where I will soon need to find Private Money to continue to fund my investments.  I am wondering what your standard offer is to investors and how you structure that agreement.

For an investor, I am looking at offering 7-8% yearly return + Equity share when sold or refinanced.
For a lender I would be looking at a negotiable Fixed Rate % APR over 15 years (possible 5 year balloon if they desired)

How do you structure your agreements?  If doing equity share, how do you determine what % to split?
What types of documentation do you have with the agreement?  Do you have some examples you can share with all of us?

Thanks in advance for any of the advice you have to offer.

[Charles Patterson]

@Kevin Romines Scalability, sharing the wealth, and timing.

Mainly on the scalability is that the traditional loans done 100% fund properties because you have to have skin in the game, and there is only so much collateral I can bring to the table before it is fully leveraged and I can no longer get traditional loans.  Which I should note that I am lucky on and a local bank that I work with does portfolio loans.  So there will be a time that those loans will not be an option to me until I build up more equity.

Sharing the wealth, There are friends, family, co-workers that can benefit from what I am doing and in return allows me to continue to grow.

Timing... those traditional loans can take time to put into place.  If I can have the money on short order I can act quickly when a deal comes up that you have to act quickly on.

I do have some properties that I will be closing on soon that I can re-finance from and wont have a great "need" for the private money for a little while.  But I want to get what ducks I can in a line now to pre-pare for the future.

Any advice you can give on this topic?