Private Lending - Note

[Jesse Houser]

Hi all,

I'm looking for a little help in how to structure a private note. Another investor and I are partnering on a flip and slipping the profits 50/50. My side of the funding is coming from my dad, who I will be splitting my half of the profit with when the flip is completed. The property is going to be in the other investor's LLC until the flip is sold. So a couple of questions.

1. How should we structure the note for the capital my dad is bringing to the deal?

2. Should it just be an unsecured promissory note (to me or the LLC?) or should he put it in place as a secured lean against the property?

And if anyone has any recommendations or a step by step process, I'd appreciate it. Or if there is another post discussing this topic, feel free to just point me towards it.

Thanks, everyone!

[Rick Pozos]

What SEC issues?? I would recommend that you DO record a lien against the property. This way if the deal does go bad you can at least take the property. 

I have borrowed money MANY times from friends, family with their own cash and from IRAs. It is always in their best interest to record a lien. If I die, run off to Nepal, or give up on life, the lender can at least take the property. It just keeps everyone safe. I even give my sister and father in law a deed of trust and Note that is recorded by the title company.