Understanding Private Money Interest Rates

[Taylor Johnson]

Last night I attended my local REI meeting and the topic was about private lending. This seminar was so helpful and got my wheels turning about prospective family and close family friends who could potentially be a private lender for flipping projects. Based on the speakers examples and recommendation, he said interest rates are between 6-8% (located in Metro Detroit Area) and I could have the option to pay monthly at a lower interest or pay a higher interest rate if I get paid when the lender gets paid, meaning after the property is sold.

I was too embarrassed to ask, but is the interest rate calculated monthly or based on the contract's deadline? Also, if I were to reach out to a family member what would those who've used private money recommend as a "realistic" timeline for a beginner? He mentioned 5 years or until property is sold. I was thinking 3 years, but I wouldn't want to scare them off if that's too long of a time for me to return their money.

Open to different thoughts and perspectives. Thanks!