Question on financing using OPM

[Jorge Crespo]

Your goals and story: Currently have 1 rental property (2 units), looking to get another during Winter

Type of property: Multi family

Location of property: TN

Purpose of financing: For downpayment on conventional loan with another property

Type of financing sought: Private money loan between friend and I

Current or prior ownership of real estate: Currently own 1 property (2 units)

Occupancy: Currently owner occupied with VA loan in my first multi family

Value of property at present and/or your offer price: n/a

After repair value: n/a

Anticipated or actual appraisal issues: n/a

Current rents per month: n/a

Fair market rents per month: n/a

Down payment or equity: 20% downpayment for conventional loan

Source of down payment funds, if applicable: Possibly private funds + my own cash

Income Source: Salaried W2 + monthly income from my first multi family

Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: $

FICO: good/excellent, (right on the border line)

Credit issues: none

Additional details: *** Hi all, quick question/idea. I'm currently looking to take an aggressive approach to expanding my real estate ambitions, I'm currently living owner occupied in a duplex I own and renting out the other side. All numbers aside, my goal is to get a conventional mortgage on another property while I am fulfilling the 1 yr requirement for owner occupied loans. But essentially I'd like to have a private lender inject some more cash into my funds to provide some octane and speed up my acquisition process. I do plan on still getting another owner occupied loan (VA) in October on another property. So all in all I plan on having 3 properties by end of 2020.

However I have a friend that would be willing to lend me a sizable amount of money ~20K+. I do know you can't use a standard personal loan as funds for a down payment, but I'm curious how a private loan between 2 individuals would work? Would this money have to go through a sourcing process , would we have to legitimize it through a bank? I've tried to research on this and can't really find a clear cut answer. 

I guess my main question is ... "If I agree to terms privately with another individual for them to loan me $20-50K and we agree on payment terms privately, would I be able to couple that with my own funds as a down payment (20%) on a (conventional loan)property?" Or are there nuances that should happen if I was to purchase and use the down payment. Is this legal? Does this have to be reported as an official credit line? Would I have to use the soon-to-be purchased home as collateral to the individual lending me the money? Or would me paying him interest suffice (providing he is okay with that.)

Would just like to know how conventional lending guidelines work with private money lending and what specifics I need to look for.

Sorry for the packed question! I appreciate all responses.

Thank you

(Edit: closing thread)