How To Structure a Private Lending Agreement for a BRRRR?

[Ryan Phelps]

Hello, I'm a first time RE investor looking to buy my first BRRRR property out of state as my local market would not work well at all for it. I'm in the process of identifying my offer to private lenders, so my question has 2 parts, 1) Do you think my offer is enticing for passive investors, and 2) What type of clause should be in the agreement if the refinance doesn't fully recoup the initial investment?

1) Private Lender Offer: 8% APR, paid monthly, while the money is invested. After refinancing, initial investment amount paid back with a 25% equity holding for the life of the property (meaning they receive 25% of the cash flow after all expenses/reserves for vacancy, maintenance, capex, etc. and/or 25% of profits when property is sold)

2) When executing the BRRRR strategy, ideally 100%+ of cash invested is returned after a refinance, but I've seen a lot of investors still may end up leaving some money in the property (~$5,000). If this occurs when using a private lender, what's the best approach for this situation? Should I cover the gap so I can fully repay the investor? Continue to pay the 8% on the remaining funds owed until the cash flow pays off the gap?

I really appreciate the feedback and insights that any of you can share with me!