Private Loan Questions

[Caleb Vance]

Hello BP,

I recently found someone that is willing to loan on my first BRRRR deal. It's both our first time, me using private money and him lending. To keep it simple, let's just say I am asking for 100k loan (purchase price of property) and giving him 10% interest on his money. I am anticipating no more then a 6 month rehab time (which I am using my own money for rehab costs).

Is it a simple 10% on the 100k when paying back the loan? So I essentially am giving him 10k + original 100k? Or does it depend on the term of the loan? If we agree to a 12 month loan but I can refi and give him the full loan amount in 6 months, do I only pay the interest amount for 6 months?

I am not sure if I am confusing myself and combining two different ways to stucture a private loan or what, but I would appreciate any help or advice on how I should structure the private loan.

Thank you in advance. 

[Paul K.]

@Caleb Vance

You only pay monthly interest payments for the time you have the loan.. if it’s a 6 month loan you would pay $5k in total interest plus return his principle of $100k