Structuring deals with friends and family...

[Rich Emery]

I have been investing in real estate on my own, without partners for several years now.  I've come to a point where I'm unable to get anymore personal mortgages, but I would like to take on more turnkey rental properties to rent.  I have friends and family with plenty of money - many of which have expressed interest in investing with me.   I feel incredibly lost when it comes to structuring deals with other people.    Here's details on the investments I make....

Turnkey properties that I fully furnish and turn into medium term rentals.   I handle all of the the work involved with this, including leases and finding tenants.   I've had very good luck with investments like this on an individual level and I'd like to grow this.

How should I structure deals with friends and family??

Ideas I have:

1. Take loans from friends and family for down payments on homes and take out DSCR loans to purchase rentals in an LLC that I 100% own. I'd pay my mortgage and note with the friend with proceeds from rental. What would the terms look like with my friends/family? This approach is kind of weird to me, as I'd have 2 loans to pay off....

2. Cosign on DSCR loan with friends/family. I have no idea what split there would be on down payment and equity with this approach? Keep in mind, I would be taking on the responsibility of the rentals, these would be hands-off investors.

I'm very open to any ideas, resources, links you all may have!  Guidance is highly appreciated!  

[Beth Johnson]

If you want to learn how to structure a private money loan with your friends and family, pick up BiggerPockets latest book: Lend to Live: Earn Hassle-Free Passive Income in Real Estate with Private Money Lending. This book teaches you how to find and fund an private money loan from the point of view of the lender. But for active investors seeking private capital, understanding how to present rates and terms and how you could safeguard your investor's capital, will go a long way in building a trusting and lasting relationship with your capital partners! Hope this helps!