Structuring Private Loans for BRRRR

[Kyle Daniels]

Greetings fellow BPers,

I have been approached by multiple colleagues talking about being interested in backing my LLC that currently holds 3 SFH's in MO. As I am not looking to give out equity, I am trying to work out a way to take on private loans from these individuals in order to finance the next home, a BRRRR.

I have a home identified, this would be a long distance BRRRR, my property management company would head up the rehab project using their certified and tested contractors, and I have a great relationship with my lender for when the project is done.

I am new to taking on private loans in this regard, especially when it comes to setting terms and interest rates.

This would be the first BRRRR project that I attempt, and the home we are looking at would be an almost "BRRRR light" as most of the work is cosmetic.

How do I structure a deal for these private loans?  How do I determine a fair interest rate?

I am some what familiar with interest only loans, and I have heard of people doing what I can only describe as "CD" style loans, where they lend an amount of money and receive the entire principle+interest at the end of the term.

Some rough math would have us looking to raise $100,000 on a 1 year term.  My initial thought is at 7% but again I am not entirely sure how to price that.  I would prefer an option where everything gets paid at the end (if this is a thing).

Thank you