What do you think of this proposal

[Cameron Philgreen]

Hey guys, I have a friend with deep pockets, and we've talked candidly about them lending on our real estate flips and BRRRRs.  He is very new to anything hard money related, so I've actually been answering most of his questions.  I just whipped up this proposal and wanted to see how it "hits you."  Obviously, all of these things can be negotiated. I'm curious if this seems fair to both parties.  Let me know your thoughts!

Lending proposal

For Real estate purchase and rehab ONLY

If hard money loan (no equity)

1 point

8% APR interest if monthly payments

Or 9% interest if we can pay at the end of project

90% purchase, 100% renovation

Interest only payments

Use “construction holdback” (draws as construction happens)

If co-ownership in a flip:

80/20 ownership

No points or interest

90% purchase, 100% renovation

No payments

Split net profit 80% to borrower, 20% to lender

Example: $100k purchase, $50k rehab, $200k sale. Split $50,000 80/20

If co-ownership in a BRRRR

50/50 ownership

No points or interest

90% purchase, 100% renovation

No payments

After rehab:

Refinance with bank in 50/50 LLC based on appraised value

Retain 50/50 equity in property

Split monthly cashflow 50/50

Example: $100k purchase, $50k rehab, $200k value, refinance on $150,000 loan (75%)

$2000/mo rents, $1500/mo debt service, split cashflow $250/$250.