How to structure/offer repayment terms to submit to a PML

[Ricky R.]

Im wanting to submit to a potential PVM some options/contract structures he and his wife can discuss. Its a long term BRRRR investment and he would be funding around 20-30k of rehab. Should i entertain an equity partnership, offer a balloon payment at refi time, 8,10,12%. Id love some advice on typical options others use. I dont want to blow this... Thanks,

Ps- How do I handle an insurance policy if Im buying the home with my LLC, via a land trust.. ?

[Joshua Parr]

If they aren't familiar with the process of lending on investments, I would keep it simple. Complicating things can drive people away. Otherwise, I would see what's important to them. Some lenders I've used want payments every month and others are fine with getting it all at the end of the project. If it were me, I probably wouldn't do an equity partnership unless they were funding a majority of the deal. In terms of the balloon payment, the plan is to pay them back when you refinance so I would just let them know that. 

With it being only 20-30k, I would just do a normal loan at whatever return makes sense for both of you (8%, 10%, 12%, etc.) I think they main thing is to see what their thoughts are and go from there.

With the insurance, it should just be under the name of the entity purchasing the property (the land trust). If the LLC is the beneficiary then you can name the LLC as an "additional insured". However, this is just what I've heard and I'm not an expert in this field so get a professional opinion.

Best of luck!